How will EIA reserves data affect oil?
Brent crude oil continues to be quoted above $50 per barrel, persistently ignoring all the fundamental prerequisites for a corrective pullback. The recovery in prices continued even despite OPEC’s forecast that oil demand in 2021 will remain subdued.
OPEC predicts that global oil consumption will average 97.3 million barrels per day in the 4th quarter of 2021, up from over 100 million barrels per day in 2019. The organization points to uncertainty about the long-term impact of the pandemic on global industry and human mobility.
A similar position is shared by the International Energy Agency (IEA), which warned on Tuesday that economic recovery in developed countries has slowed this quarter. In its monthly report, the IEA downgraded the forecast for the recovery of oil demand in 2021 by 170 thousand barrels per day to 5.7 million barrels per day.
The mood of oil traders was practically not affected by the news about the worsening situation with the coronavirus in the world. More countries in Europe and states in the US are tightening coronavirus restrictions around Christmas and New Years, which is likely to negatively impact oil demand. Today traders will be presented with the official data on changes in US oil inventories last week.
According to a survey of analysts conducted by S&P Global Platts, on average, oil reserves in the United States are expected to decrease by 1.9 million barrels, an increase in gasoline inventories by 2.6 million barrels and an increase in distillate stocks by 1.1 million barrels. The rise in petroleum product inventories will be further evidence of a drop in consumer demand. The only question is – will this be the reason for the correction of the overbought oil?