Crude oil prices up, on larger-than-expected plunge in U.S oil stockpiles
- 2nd September 2020
- Posted by: Hakeem
- Category: Commodities
Crude oil prices rallied higher on Wednesday morning, at the latter part of Asia’s trading session. The recent upside in crude oil prices was triggered by the American Petroleum Institute (API) announcing a larger-than-expected plunge in U.S oil stockpiles.
Brent crude futures gained 0.81% to trade at $45.95 by (5:09 AM GMT) and WTI futures gained 0.84% to trade at $43.12
What you must know: American Petroleum Institute recently reported a 6.360 million-barrel draw for the week ended August 28, much larger than the forecasted 1.950 million-barrel prepared by Investing.com, and the previous week’s 4.524 million-barrel draw.
Crude oil traders will now fix their eyes on U.S. Energy Information Administration’s figures scheduled to be released later today.
In addition, another macro pushing crude oil prices above the $45 price level is the recent better-than-expected U.S. manufacturing activity data released yesterday.
August’s ISM Manufacturing Purchasing Managers Index (PMI) rose to 56, beating July’s reading of 54.2 and the 54.5 forecasts. A rise in new orders saw the index climb to its highest level in more than a year.
Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, spoke on prevailing macros, affecting the prices of the West Texas Intermediate benchmark. He said:
“In early Asia, WTI is trading off Monday’s highs but is still hugging $43 per barrel, finding support from decade high PMI prints in China.
“However, near-term headwinds from the uncertain macro environment with Fed Governor Brainard striking a pessimistic tone on the economy overnight, and rising production are likely to limit the upside.
“And these issues could lead to a correction lower in the coming weeks, even more so if the mega commodity reflation trade runs out of steam as the old dog – the US dollar doesn’t look like it is going to roll over just yet.
“Still, positive medium and longer-term supply-and-demand trends supported further along the curve suggest WTI should remain comfortably above the $40-41 level.”
Crude oil prices continue to climb up amid signs of gradual demand improvement, albeit in on low volatility conditions.