The oil price is currently booming and it looks as if there is no stopping. The question in recent days has been: What weights heavier on the oil market? The Iran crisis and possible supply problems when ships no longer or more difficultly pass through the Gulf to the open sea? Or is the global economy going so badly that demand for oil is collapsing? This would weaken the price of oil!
Inventories influence the oil price
The most reliable indicator in the world is oil inventories in the USA, which are published weekly. The chart shows the WTI oil price since 1st of July. There we can see how the oil price did not know for days whether to fall below the 56 dollar mark after all. Then on Tuesday evening came the privately published API inventories, which with -8.1 million barrels already indicated a strong decline in inventories. And so the rise in oil prices could start from 58 dollars to 59.50 dollars yesterday afternoon.
Then came the official inventories of the US energy agency EIA, which showed an even stronger decline in inventories with -9.5 million barrels. Thus the oil price could rise since yesterday 4:30 pm to today morning further from 59,50 to now 60,73 dollar. Because emptying inventories show up: Either the demand of the refineries and final consumers is strong, or the world-wide output decreases. Or both at the same time! This is of course good for a rising oil price!
In US financial media it is currently mentioned that a supporting factor for the current rise in oil prices is the fact that a tropical storm is currently gathering over the Gulf of Mexico. This is why several oil platforms have been evacuated (temporarily less production).
Large chart picture
The following chart shows the big picture in the oil price trend since 2017. At the moment the oil market has opted for rising prices. From a rough chart technical point of view the interim high of around 65 dollars would be a resistance that could be called up. But, gee…. with the political situation and with the attention to economic data and inventory data… should we put an overweight on a chart technical view? As always, our last point. The oil market is and remains unpredictable. Always make up your own mind!