On Wednesday, oil prices remained stable after the API announced a larger-than-expected drop in crude inventories. On Thursday, OPEC+ will meet to explore lifting pandemic-era production curbs. WTI is attempting to break through a crucial chart resistance level of $73.5, but the rising momentum is diminishing. Crude oil prices rose during the Asian session on Wednesday, trading at two-and-a-half-year highs. Moderna’s Covid-19 vaccine was proven to be efficient in creating antibodies against the Delta variation, a newly discovered virus strain from India, according to a lab analysis. However, as viral strains continue to proliferate and change, concerns about the vaccine’s production capacity and dissemination remain. The Delta version has been linked to an increase in Covid-19 cases in the United Kingdom and Australia, threatening new lockdowns and travel restrictions around the world. This may cast a pall on the revival of global energy demand, particularly in areas where vaccine progress is poor. A growing pandemic situation could limit crude oil’s growth potential. Meanwhile, in August, OPEC+ will meet to explore further relaxing of output limitations to meet rising fuel demand. According to a Bloomberg poll, the oil cartel may increase output by 550k barrels per day in August, which is only a small portion of the expected global supply shortfall of 3 million barrels per day. As a result, tight market conditions may need a steady rise in output without producing considerable price fluctuation. Since the outbreak of the Covid-19 pandemic, the oil cartel and its allies have cut production by more than 5 million bpd. OPEC+ opted to increase output restrictions by 2.15 million bpd from May to July during an April meeting, citing a significant uptick in demand (chart below). OPEC+ Production Expected to Rise in August 2021Source: Bloomberg, DailyFX Past 5 Years of OPEC Production vs. WTI Prices The API reported an 8.15-million-barrel reduction in oil stockpiles for the week ending June 25th, compared to a projection of a 4.68-million-barrel decline. Stockpiles fell for the sixth week in a row, indicating tightened market conditions as refiners ramped up production to meet demand for the summer driving season. Later today, the Energy Information Administration (EIA) will release its weekly petroleum status report, which is likely to show a 3.85-million-barrel draw. A larger-than-expected drop in stockpiles would certainly boost prices, whilst a smaller draw or a surge could have the opposite effect. Changes in WTI vs. Crude Inventory Over the Last 12 Months Bloomberg and DailyFX are the sources for this information. WTI is currently testing a significant resistance level at $73.5 (268.2 percent Fibonacci extension), which if broken would likely open the way for more upside potential. Although selling forces may be evident around the resistance level, the overall trend remains favorable. At $70.0, you can get immediate help on a psychological level. The MACD indicator is on the verge of forming a bearish crossing, indicating that bullish momentum is diminishing. Price of WTI Crude Oil – Daily Chart—- Margaret Yang, a DailyFX.com strategist, wrote this article. Use the comments section below to contact Margaret, or follow her on Twitter at @margaretyjy.
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