Oil Markets Gain Due to Unexpected Drop in Crude Inventories

Ibeth Rivero

"While the reopening of major economies suggests that the world is ready for more Oil supply, concerns remain over whether OPEC+ maybe deciding to pull back on its supply cuts too quickly, considering the still-fragile recovery in the global economy." 

Yesterday, the oil markets advanced in light of a higher than expected drop in crude oil inventories.

The American Petroleum Institute reported recently that the crude oil inventories diminished by 8.322 million barrels by July 10th. This is remarkable because the analysts expected a drop of  2.275 million barrels per day, which signals a higher demand than expected.

Crude OilNegative pressure was taking over the markets before the figures were released, as the markets expected the OPEC+ to decrease its level of production cuts. The organization is set to decide whether it should extend its supply cuts of 9.7 million barrels per day or just diminish the quota to 7.7 million barrels per day. The markets will be paying attention to the Joint Ministerial Monitoring Committee's meeting, which is taking place on Wednesday.

"While the reopening of major economies suggests that the world is ready for more Oil supply, concerns remain over whether OPEC+ maybe deciding to pull back on its supply cuts too quickly, considering the still-fragile recovery in the global economy," commented an analyst at Forextime, "the demand for Oil has a long and treacherous path ahead before it can be restored to pre-pandemic levels," he added.

The West Texas Intermediate crude oil futures went up by 0.47 percent during Wednesday's session, closing at the 40.29 level. Conversely, Brent oil futures advanced 0.42 percent, closing the session at the 42.90 level.

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At the moment there are around 13,465,187 confirmed coronavirus cases around the world, as well as a death toll of 581,405. The United States leads in the number of infections, with 3,545,254 confirmed cases, and a death toll of 139,145, followed by Brazil, India, and Russia. Some western countries are reporting peaks on daily cases, which is spreading the fears for another lockdown.

The US Stocks markets decided to ignore this, advancing during the session. The Dow Jones Industrial Average advanced 2.13 percent, closing the session at the 26,642.59 level. Conversely, the S&P 500 gained 1.34 percent during the session, closing at the 3,197.52 level, while the Nasdaq 100 increased by 0.82 percent, closing the session at the 10,689.52 level.

On the other hand, European stock markets closed on the negative territory. The DAX went down by 0.80 percent, closing at the 12,697.36 level, followed by the CAC 40 which fell by 0.96 percent and closed the session at the 5,007.46 level. The IBEX 35 dropped 1.01 percent, closing the session at the 7,352.00 level, while the Euro Stoxx 50 went down by 0.85 percent during the session, closing at the 3,321.39 level.

Ibeth Rivero

Ibeth contributes daily market commentary in both English and Spanish (both of which she speaks fluently) and she also manages the DailyForex mobile app to ensure that traders around the world are getting important market updates in real time.

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