Crude Oil Price Drops as Gasoline Stocks Edge Higher

Summary:

Crude oil prices fell on Wednesday struggled after U.S. EIA inventories showed a build in gasoline stocks which coupled with rising virus cases.

Crude oil prices fell on Wednesday struggled after U.S. EIA inventories showed a build in gasoline stocks. The data comes as traders fret about weaker demand caused by the ongoing coronavirus lockdowns and restrictions.

The Energy Information Administration said that gasoline stocks rose by 1.9m barrels in the week ending October 16th. The expectation had been for a drop of 1.8m barrels. The latest figures also come at a time when output gasoline output was reduced by the Hurricane Delta shutdown so the outlook for gasoline demand is weak.

Coronavirus cases are still moving higher in certain U.S. states and in Europe. China has also moved to restrict outbound travel in an effort to avoid a further spread so the implications are not good for fuel demand.

Adding to traders’ concerns is a coming revival of Libya’s oil production. The country’s largest oil field is set to go back online next week after being shut down over tensions in the country. Libya has seen its production recover to the 500,000 barrels per day level with analysts expecting this to double by year-end. This will factor into OPEC’s December decision after the bloc said they would take action to support prices.

Crude Oil Technical Outlook

Crude oil failed at the $41.44 level and has now set up a bearish pattern. Price has rallied today but could move lower in coming sessions with the $39.50 level providing support ahead of $37.20.