Oil Price: US inventory draw lifts the market mood up


US crude oil inventory draw - july 23 2021

The unsettled crude oil markets seem to have got a mood booster, having been through some chaotic market speculations - at last.

With the release of the latest US inventory data by the EIA, US Energy Information Administration, the markets found some hope and the price of crude oil got back into the ‘green’ realm.

The EIA disclosed that the US crude oil inventories dropped by 4.1 million barrels during the week ending July 23; the predicted draw for the same period by the API, American Petroleum Institute, was 4.728 million barrels.

It was substantial, given the rising Coronavirus infections in the US. Its emotional impact on the crude oil markets was crucial and reaction was understandable.  

The price has been rising, but at a slower rate, perhaps, due to the anxiety of the investors about the rising uncertainties in the Middle East.

The looming departure of the US troops from Iraq and the prospect of new actors in the region filling in the vacuum thus created are causing serious concerns.

“Will the Iraqi forces manage to control the vast oil fields in the event of total withdrawal of the US forces from the country?” is something that every unbiased analyst ponders at present.

Moreover, the hope of reviving the JCPOA, 2015 Iran nuclear deal, which has been oscillating wildly between two opposing political realties in the last few months, still wields some influence over the crude oil markets; the hyperactivity in the Iranian oil sector in recent months does not let markets give up on the hope – at least at the sentimental level.

On a military front, the Houthi attacks against Saudi oil facilities continue unabated; the Arab coalition neither managed to reduce the frequency nor found a way around the growing menace; a condemnation following every single attack does not solve the problem either.

The rapidly rising infections of the Delta variant of the Coronavirus, coupled with evolving political developments in the Middle East are the two key factors that affect the crude oil markets at present.

The fall of US crude oil inventories, in this context, came as a positive signal for the markets to lift the gloomy curtain up across the sector.




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