Crude oil is trading near $72.53 on the backdrop of increased optimism of the global economic condition. Crude oil prices also found support after the prospect of extra supply coming to the market sooner from Iran faded. Indirect discussions between the US and Iran, along with other parties to the 2015 deal on Tehran’s nuclear program, resumed on Saturday in Vienna and were described as “intense” by the European Union.
Increasing economic activity in the US is likely to boost oil demand further. The Transportation Security Administration announced on Saturday that 2.03 million travellers were screened at airport security checkpoints on Friday. Also, the US Department of Transportation said vehicle miles traveled on US highways in the seven days ending June 6 rose +4% w/w to 17.2 billion miles, the second straight w/w gain of at least 3%.
Meanwhile, OPEC is optimistic that global crude demand will continue to recover after it forecasted on Thursday that global oil consumption is likely to jump by about 5 million BPD (+5%) in the second half of the current year, compared with the first half, as the world emerges from the pandemic. A positive demand outlook is likely to keep crude prices firm.
API reported that US crude supplies dropped -8.54 million bbl last week. Market awaits official weekly inventory report from EIA later today. The consensus is for crude inventories to fall -2.5 million bbl. Weekly inventory EIA report showed that US crude oil inventories as of June 4 were -4.0% below the seasonal 5-year average, gasoline inventories were -0.6% below the 5-year average, and distillate inventories were -4.9% below the 5-year average.
US crude oil production in the week ended June 4 rose +1.9% w/w to 11.0 million BPD and was down by -2.1 million BPD (-16.0%) from the Feb-2020 record-high of 13.1 million BPD.
As per Baker Hughes report regarding the number of oil and gas rigs in the US rose last week to 461 which have increased by 100 rigs this year. Active US oil rigs in the week ended June 11 rose by +6 rigs to a 14-month high of 365 rigs.
According to the CFTC Commitments of Traders report for the week ended June 8, net long for crude oil futures jumped by 19,202 contracts to 510,499 for the week. Speculative long position rose by 18,717 contracts, while shorts dropped by 485 contracts.
Crude oil is likely to continue with a positive trend while above the key support level of 20 days EMA of $68.55 meanwhile it may face resistance around $71.84 and $74.14.
Bullish Trend To Continue In Crude Oil
Disclaimer: Mr. Abhishek Bansal is a new-age, first-generation entrepreneur, and the Founder Chairman of Abans Group, a quintessential diversified business group, providing expertise in Broking Services, Non-Banking Financial Dealings, Financial Services, Agri-Commodity Services, Warehousing, Realty & Infrastructure, Gold Dore Refinery & Manufacturing, and Trading in Metal Products, Pharmaceuticals, Software Development & Wealth Management.