Wed. Dec 8th, 2021

Oil futures dropped the first gains to end on Tuesday, widening a sharp decline from the previous session, blamed on concerns about the impact on demand of the spread of the delta variant of the coronavirus that causes COVID-19.

West Texas Intermediate Crude for September Delivery CL00,

it dropped 70 cents, or 1 percent, to close at $ 70.56 a barrel on the New York Mercantile Exchange. The October crude Brent BRN00 BRNV21, the world benchmark, fell 48 cents, or 0.7%, to $ 71.41 a barrel on ICE Futures Europe. Both benchmarks fell more than 3% on Monday.

The 2021 oil rally, which has seen WTI and Brent rise by around 48% to date, has been driven by the resumption of economic growth as companies have reopened and demand from petrol consumers has increased, said Tom Essaye, founder of Sevens Report, in a note.

Continued production discipline between members of the Organization of the Petroleum Exporting Countries and their allies, or OPEC +, has also helped, Essaye said.

“While the latter is likely to remain intact in the coming months and quarters, the former is more questionable given the potential impact of the delta variant
on virus countermeasures and on uncertain economic trends, “he wrote.

If the demand pillar of oil concentration begins to collapse, current gains will not be sustainable, he said.

“Looking to the future, we remain neutral with respect to oil right now as the market seeks more information on the current fundamentals,” Essaye said. “This will likely leave WTI fixed between support at $ 66 and resistance at $ 77 / barrel.”

Nymex’s September WTI contract formed a top $ 76.07 in
in early July and a high of less than 74.23 at the end of last week, with the mid-June low at 68.86 headed lower, Commerzbank technical analyst Axel Rudolph said in a note (see the following graph).


“Below is strong support at $ 66.38 / $ 64.94, made up of the March and mid-May highs and the July lows,” he wrote. “It’s likely to be achieved soon, too.”

Investors will also be on the lookout for weekly data on U.S. crude and product inventories. The American Petroleum Institute is expected to provide its inventory readings on Tuesday afternoon, while official Energy Information Administration data is due to be released Wednesday morning.

Analysts surveyed by S&P Global Platts, on average, are looking for crude inventories to show a 4 million barrel drop last week. Gasoline stocks are expected to fall 1.1 million barrels, while distillate supplies are down to 600,000 barrels.

September futures on natural gas NG00,
+ 2.95%

+ 2.95%
jumped 2.3% to $ 4.027 per million British thermal units.

“After a large clearance on Friday, the upward momentum resumed due to warmer weather forecasts and expectations of a smaller-than-normal storage injection to be announced later this week,” said Christin Redmond, commodity analyst at Schneider Electric, note.

In the trade of other products, September RB00 gasoline,

fell 0.2% to end at $ 2,2708 a gallon, while the September HO00 diesel,

threw 0.4% to close at $ 2.1264 a gallon.

Sometimes we include links to online retail stores. If you click on one and make a purchase we may receive a small commission.

Source link

Leave a Reply