In Asian trading, the value of Brent and WTI crude oil is marginally lower, indicating that a multi-day surge that pushed WTI back over $100 bbl may be coming to an end.
Prices have benefited from the US dollar’s decline, which has also decreased the expense for overseas customers to purchase the commodity denominated in USD. The US Dollar is weaker, though, and equities indexes are increasing throughout the APAC.
Before the US inventory update on July 20 from the Energy Information Administration (EIA), traders are probably pulling back their purchases of oil. Based on a Bloomberg survey, traders anticipate a 748k barrel increase in crude oil stocks for the period ended July 15. Stocks of distillates and gasoline are both expected to increase. The American Petroleum Institute (API) also reported a 1.86 million barrel gain for the same period, exceeding the 333k barrel spike that experts had predicted.
Prices may be affected by a higher-than-anticipated rise, however, the damage will probably be restricted because of the significant shortage of storage. With just 21.6 million barrels in inventory, Cushing, Oklahoma’s major distribution and price hub for WTI, has dangerously low stockpiles. If the storage hub runs out of the 20 million barrels it requires for daily operations, prices could increase significantly. Several weeks have seen a decrease in global demand, which might aid in reducing the amount of oil being transported to the Gulf Coast.
Nevertheless, total demand is still strong. The WTI prompt spread, which calculates the difference in price between the current and following month’s contract, is strong, which serves as proof of this (see chart below). Even if tonight’s EIA statistics prove to be bearish, prices probably have little margin to fall because storage levels are close to record low levels. Nevertheless, considering the underlying environment, prices might increase if the data reveals a surprisingly large decline in stocks.
Having failed to surpass the 20-day Simple Moving Average (SMA), the prices of WTI are now hovering just over the psychologically significant 100 level.