Recent price actions reveal oil bulls are having it ugly. The major macro quenching oil bulls resolve was the EIA data released yesterday showing a massive build in U.S oil inventories of about 4.3 million barrels, well ahead of the 1.1 million barrels build anticipated by many energy analysts.
At Thursday’s trading session oil bears seem calm, as oil volatility reduced dramatically, with prices stable on reports that Hurricane Zeta is disrupting crude oil production in the Gulf of Mexico.
Still, Brent crude prices are having the fight of their lives breaching above $40/barrel at the time this report was written.
Rising COVID-19 case numbers are spiraling weighing harder on oil bulls as emerged markets start clamping downs on social activities leading to growing concerns that the already soft energy demand prevailing in the oil market would only get worse.
On the geopolitical spectrum, the bulls are finding it hard to propel upward on reports that show Biden leading most polls, such bias means there are higher prospect that major crude oil producer Iran might regain resumption of oil supplies once the blue party prevails in the highly contested election scheduled to hold November 3, as raised fears among oil hawks that crude oil prices might approach as low as $30/barrel considering the prevailing weak demand and strong U.S dollar rebounding at an astronomical rate.
Iran has the ability to generate around 3.8 million barrels a day, meaning such an amount entering the seemingly saturated oil market, would definitely send Brent crude prices breaking below its key support level of $35/barrel and in the case of WTI lower than $30/barrel.
The timing for all these macros mentioned above, keep the outlook for crude oil prices blurred amid the oil cartel’s resolve at keeping oil production in check by restraining supply to propel the upward movement of oil prices as the COVID-19 onslaughts’ continue to distort energy demand.
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This article was originally posted on FX Empire