U.S. Crude Oil Stocks Plunge By 7.998 Million Barrels - Forex News by FX Leaders
crude oil

U.S. Crude Oil Stocks Plunge By 7.998 Million Barrels

Posted Wednesday, November 4, 2020 by
Shain Vernier • 1 min read

There has been no Election 2020 hangover on the commodity markets. As a result, WTI crude oil is trending higher as supplies continue to tighten. Prices of December WTI futures are up more than $1.40 per barrel and trending above $39.00. If the bidding continues, $40.00 will be back in play very quickly.

EIA, API Reports Show Steep Supply Draws

Like the rest of 2020, crude oil’s adherence to seasonality is a complete anomaly. Typically, we see supply builds in the fall and winter. Not the case this week, as U.S. oil stocks have plummeted. Here is a quick look at this week’s figures:

Event                                                                 Actual               Projected           Previous

API Weekly Stocks (Oct. 30)                            -8.01M                    NA                    4.55M

EIA Weekly Stocks (Oct. 30)                           -7.99M                   0.890M              4.32M

So, why are stocks dwindling? First, North American fracking output is way down following the COVID-19 industry washout. Second, late-summer/early-fall refined fuel demand has remained steady as economic activity continues to grow. Coupled with an active 2020 Gulf Coast storm season, crude oil stocks are down and WTI prices are up.

WTI Crude Oil Drives Toward $40.00 

If I had to pick one WTI technical level to watch in 2020 it’s $40.00. This price point has been a key area of fair value for a significant portion of the year. Right now, December WTI crude oil futures are once again trending toward $40.00.

December WTI Crude Oil Futures (CL), Daily Chart
December WTI Crude Oil Futures (CL), Daily Chart

Overview: Today’s bullish action in crude oil comes as a bit of a surprise. With COVID-19 lockdowns back in play and demand poised to recede, such a rally is interesting. In any case, this week’s drop in the U.S. oil supply is sending prices higher.

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies

About the author

Shain Vernier // US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
Related Articles
During Wednesday's Asian trading session, the [[WTI]] crude oil prices failed to end its previous two-day declining streak and remained bear
27 mins ago
Comments

Leave a Reply

avatar
  Subscribe  
Notify of