The prediction of United States crude inventory fall signals increases in American oil consumption. On July 29, the oil prices gained as an estimated US crude oil inventory decline continues to alleviate market fears over a supply glut surge.
International benchmark Brent crude was exchanging at $43.77 per barrel at 0630 GMT on Wednesday. That represented a 1.27% gain after closing July 28 at $43.22 a barrel. On the other hand, American benchmark West Texas Intermediate was valued at $41.12 a barrel at that time representing a 0.19% increase after it ended Tuesday’s trading session at $41.04 per barrel.
Late on July 28, American Petroleum Institute (API) published its prediction of a decline in the United States crude oil inventories by 6.8 million for the week that ends July 24. While that forecast signaled that the US consumption may have increased; it also calmed many investor fears amid the growing glut of oil supply on the global market.
Turning to the demand side, nonetheless, the increasing number of novel coronavirus (COVID-19) cases around the world; is negatively affecting the global economic outlook and general oil demand. Therefore, it is maintaining downward pressure on oil prices.
Global COVID-19 cases have surpassed 16.7 million globally based on the latest data from Johns Hopkins University. The United States continues to lead with the most cases at 4.3million and Brazil comes in second with 2.5 million cases. India is also hit hard coming in third with over 1.5 million cases.
If these numbers continue to surge, governments may revert to new lockdown measures which will reduce the oil demand. If that happens, the oil prices will plunge once more.