WTI Crude Expected To Trade In The Red While Priced Below $70.30
Abhishek Bansal | Jul 20, 2021 01:54AM ET
WTI Crude Oil prices were hovering at $66.56, a significant drop from the recent high of 76.98 set on July 6. Oil prices have fallen about 13.5 percent since their latest high. The OPEC+ pact is expected to increase oil supply, while increased COVID-19 infections are expected to reduce oil demand, lowering oil prices.
Oil prices have been under pressure since OPEC+ agreed on Sunday to increase oil supply from August to calm prices, which had reached their highest level in more than two years earlier this month.
On the economic front, the July NAHB housing market index in the United States unexpectedly dipped -1 point to an 11-month low of 80, falling short of expectations of the stable 81.
The increased number of COVID-19 cases around the world is anticipated to have an impact on oil demand. According to Johns Hopkins University, the global COVID-19 caseload has surpassed 190.8 million, with over 4.09 million deaths, with Russia, Vietnam, and Myanmar emerging as new hotspots of cases, albeit immunizations have surpassed 3.64 billion.
The net long position in crude oil futures fell by 25139 contracts to 497351 for the week ended July 6, according to the CFTC Commitments of Traders report. The speculative long position lost 24799 contracts, while the short position gained 340 contracts.
According to the EIA, US crude oil stockpiles were -8.1 percent below the seasonal 5-year average as of July 9, gasoline inventories were -0.5 percent below the seasonal 5-year average, and distillate inventories were -3.7 percent below the seasonal 5-year normal.
Meanwhile, US crude oil output grew +0.9 percent w/w to a 14-month high of 11.4 million bpd in the week ending July 9, down -1.7 million bpd (-13.0%) from the record-high of 13.1 million bpd set in February 2020.
Additionally, Baker Hughes announced on Friday that active US oil rigs increased by 2 rigs in the week ending July 16 to a record 1-1/4-year high of 380 rigs. A spike in crude oil rigs in the United States is projected to boost production in the country.
WTI crude oil prices are likely to continue negative as long as they remain below the important resistance level of the 50-day EMA at $70.30, with immediate support near $64.15.
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