Oil Price: Light at the End of the Tunnel, at last! EIA Inventory count does the trick again

 

Oil inventories

Oil price is on the rise again at the news from the EIA, the US Energy Information Administration, that the US crude oil inventories are on decline for the past few weeks and it remains to be consistent for a significant period of time.

That means the US road traffic is returning to normal at a steady pace and factories are gearing up to get their output right.

There was no knee-jerk reaction from the markets to the first presidential debate between President Trump and his rival, Joe Biden. Neither did the latest opinion polls that usually are not in favour of the incumbent.

Although the rise in price is a relief for weary investors, it’s far from certain when it actually will go up to $50 a barrel in the current circumstances. In this context, most of the OPEC members will still struggle to balance their books.

The hierarchy of the OPEC members may have understood the bitter truth that strategy of production cuts in order to shore up oil price is easier said than done; most members need to find ways to increase their revenue to keep their domestic troubles at bay.

The feeble demand for jet fuel is a major inhibiting factor against the oil price recovery. Unfortunately, there are no signs of any improvement on this front. Even politicians with enviable optimism hardly talk about this worrying issue that potentially determines survival of thousands of jobs in the whole sector – in the Western world and beyond.

Developing countries, such as India, feel that they have gone past the peak of the pandemic. In proportion to the scale of optimism, there are indications of heightened activities in the transport sector and activities.

In this context, we will go beyond static demand of crude oil in the next few weeks and price will rise slowly while following the trend.

Let’s keep fingers crossed!

Charts that matter are here:

Oil charts that matter


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