Oil Markets Advanced on Falling US Crude Oil Supplies

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The OPEC admitted recently that this year’s oil demand was worse than they previously expected. 

Yesterday, the oil markets advanced after the markets learned that the US crude oil supplies fell for the third consecutive week.

Crude OilThe Energy Information Administration claimed on a report that was released yesterday that US domestic crude oil supplies fell down by 4.5 million barrels during the week that ended on  Aug. 7, posting a contraction for the third consecutive week. The figure was below the analysts’ expectations, who foresaw a  4.7 million barrels contraction, and remains in line with the  American Petroleum Institute report, which claimed that oil supplies fell by  4 million barrels.

In addition, the OPEC admitted recently that this year’s oil demand was worse than they previously expected. In a recently released report that assumes that the Covid-19 crisis will be contained, oil demand will fall by 9.1 million barrels per day this year, standing at 90.6 million barrels per day, dropping by 4 percent from the previous year. This projection is over the OPEC previous one, which stood at -3.7 percent.

For next year, the OPEC expects that the oil demand will rebound by 7 million barrels per day, highlighting that the outlook is highly dependent on the large uncertainties that may end up negatively affecting oil consumption.

The West Texas Intermediate crude oil futures went up by 2.55 percent on Wednesday, closing the session at the 42.67 level. Conversely, the Brent oil futures gained 2.09 percent during the session, closing at the 45.43 level.

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The Treasury Secretary, Steven Mnuchin together with the White House economic advisor, Larry Kudlow said yesterday that Donald Trump’s administration is considering cutting capital gains taxes.

“We are looking at middle-class income tax cuts and capital gains tax cuts to spur investment and jobs and liquidity,”  said Kudlow, highlighting that President Trump wouldn’t attempt to achieve this through an executive order. Last week Trump decided to sign an executive order to provide a $400 unemployment boost, defer student loans, avoid evictions, and a payroll tax holiday.

The Labor Department reported that consumer prices gained 0.6 percent in July, mostly pushed up by a rise in gasoline prices. This figure was above the analysts’ expectations, who foresaw it to be at 0.2  percent. Food prices dropped for the first time since April, going down by 0.4 percent in July, while grocery prices went down by  1.1 percent. On the other hand, Gasoline prices rose significantly, advancing 5.3 percent in July.

At the moment there are 20,820,287 coronavirus cases around the world, as well as a death toll of 747,476. The United States leads in the number of infections, with 5,360,302 confirmed cases and 169,131 total deaths, followed by Brazil, India, and Russia. Just on Wednesday, 1500 coronavirus-related deaths were reported in the United States, the highest figures since the middle of May.

The US stock markets rose sharply on Wednesday on the hopes for a COVID-19 vaccine and for a US stimulus package, though it seems that the stimulus talks seem to be dead. The S&P 500 gained 1.40 percent during the session, closing at the 3,380.35 level, while the Dow Jones industrial average advanced 1.05 percent, closing the session at the 27,976.84 level. Conversely, the Nasdaq 100 increased by 2.59 percent during the session, closing at the 11,157.72 level.

Conversely, the European stock indices closed Wednesday’s session on the positive territory. The DAX gained 0.86 percent during the session, closing at the 13,058.63 level, while the FTSE 100 went up by 2.04 percent, closing the session at the 6,280.12 level and the  Euro Stoxx 50 advanced 0.93 percent during the session, closing at the 3,363.18 level.

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