The oil price is currently showing weakness. A look at the big picture shows that WTI oil has risen very strongly in recent weeks (chart since March). Therefore, the current small price decline is easy to cope with? Rather a small technical correction in between? From prices below the zero line on the futures market as recently as April, the market has risen continuously until now, to yesterday’s high of 41.60 Dollars. Currently, the market is trading at just under 40 Dollars. Basically, there is still room for further upward movement, after the previous high in the WTI on June 8th at 40.40 Dollars in the oil price was exceeded. But now, what is the current situation?
Current weakness in Oil price has reasons
This current weakness in Oil prices can still be seen as a technical breather on the way up. But this current weakness also has three concrete reasons. Firstly, there are the API inventories in the USA, which were published last night at 10:30 pm. According to API, inventories rose by 1.7 million barrels compared to the previous week. With expectations of +0.3 million barrels. This of course feeds fears that the demand for oil in the U.S. is faltering due to the slower economic recovery.
On top of this, two news items were released this morning, which, in addition to the price of Oil, are also causing weakness in the stock market. The German ifo index was better reported at first glance. At second glance, the figures are mixed. And according to the latest reports, the USA allegedly wants to impose new tariffs on the EU. This is causing further concerns about world trade. This will also be negative for a recovery in Oil demand.
Attention Corona and today 4:30 pm
From the USA, an increasing number of corona infected people are reported by important states. The stock market in the USA could slide sharply at any time in the event of new shock reports. At the same time, the price of Oil could fall sharply as a result of concerns about the economy. One should always keep this in mind! And today, when it comes to Oil, one should look specifically at the governmental publication of the Oil inventories in the USA, which are reported at 4:30 pm German time. This event can give a new impulse to the Oil price, if the number is different from the API specification.