The end of the oil market rally?

By 05/08/2021News

Gold  1810,695

EURUSD   1,1837

DJIA  34752,50

OIL.WTI  68,405

DAX  15660,50

On Wednesday, the latest US oil and petroleum product inventory change data was released. And the data came as a shock to traders who were trading long in black gold.



According to the published statistics oil inventories increased by 3.627 million barrels at once, while analysts had expected a fall of 3.102 million barrels. The news immediately put pressure on oil prices. The oil price is losing a few percent in the moment. And it’s dropping well below the critical $70 level.
Traditionally, at the end of July, stocks of petroleum products in storage are lower. This is caused by the holiday season. Millions of Americans get behind the wheel of their cars and travel across the country. The disruption of the seasonal factor tells us that oil producers in the US (and above all shale producers) continue to increase production levels of black gold.
Fundamental factors are also adding to the rising sentiment of the bears. The threat of new lockdowns in many parts of the world due to the delta strain of coronavirus is on the rise.
Also a separate and very serious risk is the possible entry of Iranian oil into the market. In a dynamic equilibrium situation, even an additional 0.5 million barrels per day could shake the supply-demand balance considerably.
The outlook for the oil price could also be affected by economic data from the ADP in the USA. It shows that the labour market and economy in general is improving. Markets are concerned that this may prompt the US Federal Reserve to start cutting stimulus earlier than planned. The S&P 500 index has been losing about half a per cent since the open. At the same time the dollar index rises to its highest level in a week.
Thus, all of the above factors could contribute to a further drop in oil prices.

13.00 Bank of England interest rate decision
13.00 Bank of England meeting minutes
14.30 US initial jobless claims for the week

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