Oil price recovers and US crude oil inventories are down - correlation established once again

 

Weekly oil price

US Oil Inventories

The price of crude oil is showing signs of recovery at the beginning of this week, while leaving the tumultuous fluctuations firmly behind it.

It hasn’t reached the $40.00 mark yet; the trend, however, encouragingly positive, against the combined background of settling US political uncertainty and less than predicted catastrophic aftermath of the second wave of the coronavirus.

In addition, the US crude oil inventories, according to the EIA, the US Energy Information Administration, are on decline again. This is a factor, in my opinion, that always shows a strong correlation to the volatile oil price.

China and India, meanwhile, import oil at a steady rate, reflecting the awakened industrial activities. In Africa, the continent with the least impact by the pandemic, the activities have been on track as if nothing happened there.

All in all, the demand for oil will gradually pick up and so will the price. The change in US administration will not change the realties on the ground as finding an alternative for oil and gas, at least in this decade, is easier said than done.

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