Crude Oil, EIA, Gasoline, Inventory, Covid – Talk Points
- Raw and Brent oil Benchmarks will gain momentum from the decline in EIA inventories
- Fears of the virus will continue to affect prices during the Delta Covid wave
- Prices rise above the 20-day SMA, MACD becomes higher with RSI
Rising inventories of weekly US Energy Agency (EIA) data led to a slight rise overnight in crude and Brent oil benchmarks. Analysts expected US stocks to fall by 2.93 million barrels in the week ending July 23, but that figure exceeded 4.09 million barrels. In addition to raw materials, EIA data also showed a decline in fuel products. This promises a good demand narrative, as petrol products are considered to be the main indicator of oil demand.
Oil prices hit earlier in July when the highly infected Covid Delta variant began to spread through major economies, causing demand-side fears. The new virus variant is likely to reduce some demand, as Australia, South Korea and other countries have recently introduced closure restrictions. However, other economies, such as the US and the UK, continue to recover, dampening potential demand effects.
However, virus fears are likely to continue to affect prices as foreclosures limit demand in certain parts of the global economy. As the Asia-Pacific region makes progress towards vaccination rates, fears of demand may subside. Alternatively, accelerating rates, especially in developed countries, could see oil benchmarks lower. The next weekly oil reserves in the United States are likely to protect these fears.
Technical forecast of crude oil
Crude oil rose above the 20-day moving average (SMA), putting prices on a firmer footing. What’s more, the MACD line turns higher and sees a signal line above the bullish signal. The Relative Strength Index (RSI) is also rising after it recently exceeded its 50 midpoints.
A drop of lower can take prices to support a 20-day SMA or 70 psychological levels. The goal of deeper contraction would be a supportive ascent. Alternatively, if prices continue to be higher, the focus will be on the highest level of the last several years, 76.98, which is slightly above the October 2018 peak of 76.90.
Crude oil daily schedule
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Crude Oil Trade Resources
– Written by DailyFX.com analyst Thomas Westwater
Be in touch Thomas, use the comments section below, or @FxWestwaterTwitter