The price of oil can remain quite stable at the current level of 33.79 Dollars (WTI). Last week we already discussed the brightening situation for oil as well as for stocks. The economies are being boosted again worldwide. The demand for oil is rising. And lo and behold, oil inventories in the US have been surprisingly down last week and the week before last. This has been a major contributor to the recent rises in oil prices. On May 12th, prices were still around $25, now around $34.
Hong Kong fears weigh on the outlook for oil prices at the end of this week
Donald Trump is currently telling us (see here) that he will probably do something against China on Thursday, but more likely on Friday. Because Beijing will probably pass the new security law for Hong Kong tomorrow, Thursday. Are there US sanctions against Chinese imports, banks, politicians? We shall see. Then, as with the stock markets, there could be a sudden drop in the price of oil and thus a break in the trend – at least temporarily. The mood on the oil market is still good. The focus is on the resurgence of economic activity around the world, and thus on an increase in demand for oil.
The OPEC slogan
OPEC‘s slogan to its members and also to partners like Russia is quite clearly “persevere”. Now that the oil price has risen noticeably again in recent weeks and demand for oil is picking up again after the corona crisis, “please, dear participants in the cuts, do not immediately increase production volumes again. Keep to your promises for the cutbacks”. This is how one may well understand the statement of OPEC (see Tweet). They are currently cutting very large quantities of their production. The longer you stick to this consistently, the greater the likelihood that global demand for oil in the summer may even exceed supply. That would be fantastic news for all those who are longing for a much higher oil price.
Attention, inventories are important for Oil price
Monday was a holiday in the USA. In such a case, US citizens always postpone all their economic data by one day. That is why the API data for oil inventories will be published tonight at 10:30 pm German time instead of yesterday (a decrease of 2.5 million barrels compared to the previous week is expected). The official data will then be published tomorrow at 5pm German time. Will they bring the third consecutive week of declining inventories? This could give the oil price further support on its way up! But as we said, please do not forget how Donald Trump might react to China’s new security law for Hong Kong at the end of the week. This could be a game changer for the Oil price, the Gold price, and the Stock Markets for the next days!