Crude oil prices began the third quarter on a bullish momentum after an energy report showed that crude inventories in the world’s largest economy plunged more than expected. This suggests that demand is picking up, even with the resurgence of the COVID-19 virus.
Brent crude gained 1.1%, to trade at $41.73 a barrel by 6:30 am Nigerian local time, also U.S. crude was up 1.27%, to trade at $39.77 a barrel.
U.S crude inventories plunged by 8.2 million barrels to 537 million barrels, against experts’ forecasts for a draw of 710,000 barrels.
Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note sent to Nairametrics, explained the bullish bias currently happening in the energy market. He said:
“Oil prices jumped after settling -1.08 % when The American Petroleum Institute (API) survey estimated a significant draw in crude oil inventories of 8.156 million barrels for the week ending June 26, which was much higher than analysts guesses.
“However, bullish appetites could be tempered somewhat as distillate inventories were up by 2.638-million barrels for the week, compared to last week’s 2.605-million-barrel draw. And in contrast to the headline number, Cushing inventories reported a small build of 164,000 barrels.”
Innes continued by giving a detailed analysis of what seems to be an evaporated oil output glut market, even with concerns about COVID-19 arising.
“The oil market has had a busy 24 hours digesting a stream of headlines, the onslaught of grim warnings around global Covid19 concerns notwithstanding.
“But without question, if the API estimates are vetted by the official government agency data due out tomorrow, this will be viewed as a definite bullish signal. The reports could go a long way to easing some of those lingering inventory concerns. And possibly there is enough oomph in today’s announcement to trigger a retest of the psychologically important WTI $ 40 before tomorrow’s EIA release.”
The virus continues to spread around the world with ever-increasing rates of infection. Cases now total more than 10 million with more than half a million people dying after contracting COVID-19.