US Oil Inventories: sudden hike may affect oil price

oil inventoris build



The US crude stocks, according to the EIA, the Energy Information Administration data, have gone up by a few million barrels, bucking the trend that was downward for months.

Since this is a major factor in determining the crude oil price, its effect will be felt in the oil markets in the coming days. It means the oil rallies that we witnessed so far may become relatively static.

It doesn’t mean yet another crash; on the contrary, it will be back on upward trend in a few weeks.

The uncontrollable Coronavirus infection rate in the US may be a contributing factor for inventory-build up in the US. Apart from that, no global factor, significant enough for causing a major impact, is not at play at present.

Since the US health regulator gave the green light for the Pfizer vaccines, the mood, both among the general public and the investors, will change in proportion to the promised results of vaccination campaign.

There are, meanwhile, some countries in the world that do not show any sign of decline in the demand of oil. Brazil and China, for instance, despite being affected by Coronavirus very badly, clearly show that demand for oil has gone up. Even in India, the demand has picked up – almost, to pre-pandemic level.

On a positive note, the markets in general and oil in particular, will welcome the normalisation of ties between Morocco and Israel. If this once-unthinkable trend continues, the Middle Eastern political landscape will change beyond recognition in a matter of years – proving the oil markets with an enviable platform to stand on in a volatile region.

In this context, US inventory stock will come down in a matter of weeks towards the end of winter that in turn will boost the crude oil price – at least, closer to what it was before the pandemic.

 

 


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