Crude oil price is on track to a new high year-to-date after recording gains for eight consecutive weeks. Since mid-August, the commodity has had its price surge amid the positive demand outlook. The ongoing energy crunch has continued to boost prices despite the build in oil stockpiles. At the time of writing, WTI futures were down by 0.68% at $82.47 while Brent oil is up by 1.14% at $85.08.
Oil demand outlook
One of the aspects that have heightened optimism on global oil demand is the ongoing recovery from the coronavirus pandemic. After a prolonged period of lockdowns, various countries have expansively opened their borders.
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For instance, the US is expected to lift its travel ban for fully vaccinated foreigners from 8th November. Besides, India is now open to tourists arriving in the country via chartered flights. Increased travels, both locally and internationally, is expected to boost oil demand.
Besides, with the ongoing energy crunch, crude oil is seen as an alternative to natural gas. China is already experiencing lower temperatures ahead of the winter season in the Northern hemisphere.
Crude oil price is also reacting to the weekly US inventory data. Numbers released by the American Petroleum Institute (API) late on Tuesday showed that oil stockpiles rose higher than expected for the week ending on 15th October.
According to the institute, the amount of oil in storage increased by 3.294 million barrels. The figure is higher than the forecasted build of 2.233 million but lower than the prior week’s surge of 5.213 million. At the same time, gasoline inventories and distillate stocks fell by 3.5 million and 3.0 million barrels respectively.
Notably, oil stockpile data has come in higher than expected for four weeks in a row. Even then, crude oil price has recorded gains for eight consecutive weeks. Analysts and investors alike remain bullish on about global oil demand amid the ongoing energy crunch. On Wednesday, EIA is scheduled to release its stockpile numbers.
Crude oil price may be subject to profit-taking in the short term after the two-month rallying. However, the probable pullback may still have WTI futures trading above the crucial support level of $80 as the market remains heavily bullish.
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