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Crude Oil Jumps, Experts Remain Bearish

Summary:
Futures for crude oil jumped today, with West Texas Intermediate crude rallying more than 3% and Brent oil rising more than 2%. Some market analysts speculated that the rally was a result of gains in the European and US stock markets. Despite the strong bounce, prices recovered less than half of the losses registered yesterday. Furthermore, many analysts argued that fundamentals remained bearish to the commodity. Investors remained concerned about the COVID-19 pandemic and its impact on the worlds’ economies, especially after today’s negative headlines about vaccine development. Crude oil is a growth-related commodity, and the ailing global economy promises a lower demand for fuel and energy. Adding to concerns was the storage space for oil. Floating storage is again in demand,

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Futures for crude oil jumped today, with West Texas Intermediate crude rallying more than 3% and Brent oil rising more than 2%. Some market analysts speculated that the rally was a result of gains in the European and US stock markets.

Despite the strong bounce, prices recovered less than half of the losses registered yesterday. Furthermore, many analysts argued that fundamentals remained bearish to the commodity. Investors remained concerned about the COVID-19 pandemic and its impact on the worlds’ economies, especially after today’s negative headlines about vaccine development. Crude oil is a growth-related commodity, and the ailing global economy promises a lower demand for fuel and energy. Adding to concerns was the storage space for oil. Floating storage is again in demand, and the threat of limited storage capacity returns. Oil producers had already faced the problem of storage in April, and back then the prices reached an unprecedented drop into the negative territory.

The American Petroleum Institute will release its report on US crude oil inventories later today, while the Energy Information Administration will release its report on Thursday. The reports were postponed by one day due to the holiday in the United States on Monday. Last week, the EIA report showed a big drawdown of 9.4 million barrels. The EIA will also release a report on US natural gas inventories tomorrow.

Futures for delivery of WTI crude oil in October climbed by $1.27 (3.45%) to $38.03 per barrel on NYMEX today. November Brent crude jumped by $0.92 (2.31%) to $40.70 per barrel on ICE. Natural gas was about flat at $2.4 per million British thermal units on NYMEX.


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Vladimir Vyun
Vladimir is an online journalist with background in computer science and work experience in pension funds. He contributes news reports, fundamental analysis and sentiment forecasts to TopForexNews.com and CommodityBlog.com. His main specialization is the currencies of emerging economies and inter-market correlations with commodity and bond trading.

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