Brent Crude Oil Calm Ahead of US Oil Rig Count Data
Brent crude was 0.30% lower on the day as the market awaits U.S. oil inventories from the U.S. Energy Information Administration (EIA). Brent is trading under the $43.50 level which has capped prices since early-September.
A meeting of OPEC officials on Monday saw the group pledge support for oil prices after the virus effects on demand. OPEC had planned a significant cut to production in December but most of Europe is now going back into lockdown, which will hurt demand and the cuts may have to be revised. There is still a looming increase from Libya, which is not tied to OPEC rules, and this will have to be accounted for in the decision. A Norwegian oil worker strike ended last week and U.S. production has also restarted after hurricanes so the supply risk has been tempered.
Today sees further data from the EIA on crude inventories in the U.S. and this could be a catalyst for Brent. The EIA expects a drawdown in distillates during the winter as through demand in the agriculture and residential sectors, according to a new report.
The oil patch is being boosted by another drop in the U.S. dollar and this is occuring despite the stalled talks over a second U.S. stimulus package. The deadline set by the House Speaker has passed but markets are taking the optimistic route that a pre-election deal can be achieved. The dollar is dropping as a post-election deal is still seen as inevitable.
Brent crude oil prices are hovering under the $43.50 level which has provided strong resistance since September and a breakout of this level is needed to see further gains. Traders could go long a bullish close above that level. There is still a risk while we are beneath this level that a return to test the $39.40 lows could be on the cards. The Investing Cube team is currently available to help traders with their commodities trading via the Forex Trading Course or one-to-one coaching.
