The oil price fluctuated from Wednesday afternoon to yesterday afternoon for a about three days in a very low range. WTI oil fluctuated between 59.90-60.90 dollars. For the volatile market of recent months, this was almost a comatose situation. The following chart since July 4th shows the sideways trend of the last days quite well. But now a bit of life is coming back into the chart again.
Oil price moves again – two reasons
But from yesterday afternoon until this morning some life has come into the market again. The WTI oil price drops by a about 1 dollar to currently 59.50 dollars. One reason for this relapse is the Chinese GDP data from yesterday. They turned out worse than ever since data recording began in the 90s. This has caused doubts about oil demand from China!
And then there is the tropical storm that has swept across the Gulf of Mexico and the southern US coast in recent days. Workers were withdrawn from oil platforms in the Gulf for days. A production of 1.3 million barrels per day was not available to the oil market. But now that the storm has ended, production is likely to be boosted rapidly and that output is coming back to the market. This of course puts pressure on the price of oil!
So the market (finally?) has two short-term reasons to fall a little. It may also play summer hole and chart technique a small part. Because have a look at the charts. The oil price has risen by 10 dollars in the last four weeks! A little break is good for that. Now on this Tuesday the weekly start to the US inventories for crude oil begins. This evening at 10:30 pm German time the privately determined API inventories will be published. Tomorrow at 4:30 pm the official data of the energy authority EIA will follow.
Last week it was more than impressive to see how much inventory data from the US is moving the market. Oil prices were driven by API data from $58 to $59.50 (declining inventories). Then the next day the EIA data came with even larger declines in inventories, and WTI’s oil price rose further to $60.90. The market was then able to maintain this fundamentally high level for the time being. Until now there were these two for the oil price negative news (China + Gulf of Mexico). We can assume that API and EIA data will now take over the “control” over the price development again in the short term. Because they are the best indicator of whether more oil is being produced than is actually being demanded by consumers. If too much has been produced, inventories will rise, and vice versa.
US supply volume
The oil market will also look tomorrow at the officially announced production volume in a weekly comparison. A report of the EIA suggests that the frackers in the large production areas in the USA continue to increase their production. The record levels in US production could therefore continue to rise and thus further depress the oil price. So, eyes on this evening and tomorrow afternoon!