Fear of Crude Oil Market being Saturated Lingers on
At the time of writing, Brent Crude Oil and West Texas Intermediate had lost about 1%, although both oil contracts remained above $ 40 / barrel.
Both crude oil benchmarks were up more than 9% the previous week, posting the largest weekly gain in Brent crude since June.
With exogenous supply expected to return and short-term constraints weakening, it is not surprising that the black liquid hydrocarbon is sinking as fears grow that the crude oil market may remain saturated.
With oil exploration starting at America's premier hub, and recent reports suggest that the Libyan Sahara field will produce 40,000 barrels of oil a day before reaching its optimal capacity of nearly 300,000 barrels in a few days, oil traders become concerned about the demand for crude oil . In the prevailing economic climate, a realignment of the offer may not be possible.
Also in the back of the minds of many oil traders is the skyrocketing rate of COVID-19 cases worldwide, with highly competitive US elections coming up in a few weeks, as the gas needed to break crude oil's price continues to be blasted in the short and medium term between 38.50 and 45 USD / barrel.
Although credit should be given to OPEC + for supporting oil prices at these current levels, it remains to be seen whether, given the impending budget deficits in economies, the oil cartel will remain determined in the long term to reduce its oil production quota by disrupting the COVID-19 pandemic .
Even so, some traders are sticking to their positions as the likely US election winner as President Trump's re-election will be good for crude oil bulls even though his re-election chances seem to be dwindling like the ice in the sun.
Finally, a registered COVID-19 vaccine available in the medium term could push crude oil prices near $ 50 / barrel.
In our economic calendar you will find all economic events of today.
This article was originally published on FX Empire
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