The usual prevailing macros affecting oil prices include soft energy demand, rising COVID-19 caseloads coupled with North Africa’s oil juggernaut Libya’s return to the already sensitive oil markets weighed heavily on black fossil oil.
Brent oil futures at the time of writing this report traded slightly above $40.80/barrel losing more than 1.6% in its value, not forgetting the U.S oil-based traded contract, West Texas Intermediate futures trading slightly above its critical support level of $38.50/ barrel, thereby revealing losses of more than 2% amid the pending hurricane storm Zeta scheduled to hit the U.S Gulf Coast, anytime from now.
It’s fair to say that oil bulls are back on the bench at least for now amid growing distortion in energy demand/supply rebalancing coupled with the lingering U.S. stimulus deal and the highly contested U.S election coming to play in some days’ time.
Crude oil bears are presently having a party of a lifetime on reports coming from the American Petroleum Institute (API) showed a rise of 4.577 million barrels for the week that ended on October 23, and not surprisingly, it also showed gasoline inventories ticking up as Americans head to the winter months, at a time when economic activities are relatively lower due to the cold.
Heavy losses seen in recent price action are prevailing on the bias that energy experts were expecting a build of 1.2 million barrels.
Compounding the oil bulls’ woes remains the usual suspect, COVID-19 pandemic weighing heavily on the distorted energy market, with caseloads rising rapidly at the speed of sound, to an extent that many economic experts are now downgrading their economic recovery expectations further into the future.
Johns Hopkins University data printed the number of individuals affected with the deadly virus is now nearing 44 million globally as of October 28, meaning restriction of human mobility might be intensified, as COVID-19 virus now looks out of control.
The blurred mood among oil traders remains tuned on fading reflationary hopes and heightened fears that French lawmakers are considering a frightful economic step back into the Covid-19 full stop abyss with full lockdown measures now on the table , one thing remains clear oil bulls are far away at least in the near term.
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This article was originally posted on FX Empire