Crude oil prices rally ahead of OPEC monthly report

Crude oil prices’ turnaround is evident. In April 2020, investors who trade oil were startled when the futures dipped to the negative zone. During this period, WTI futures fell to around -$0.11. Brent futures were slightly higher at ~ $16.16. Currently, both benchmarks are trading above the $50 psychological price level. WTI futures are up by 0.32% to trade at $53.05. Similarly, Brent futures have risen by 0.25% to $56.14.

The bullish inventories data, and the ongoing positive sentiment triggered by Saudi Arabia’s decision has promoted the rally. Investors looking to trade oil are now focusing on the OPEC monthly report and Biden’s stimulus package.

US records a decline in crude oil inventories

Crude oil prices are still reacting to the availed data on US inventories. On Tuesday, the Energy Information Administration released figures on the amount held in storage by firms within the US. According to the agency, last week’s inventories represented a decline of 3.247 million barrels. While the numbers were lower than those of the previous week, they beat the estimates of -2.266 million barrels.

This is the third consecutive bullish report on crude oil stockpiles. In the prior press release, the amount in storage had reduced by 8.010 million barrels. However, gasoline inventories and distillates stocks showed a rather bearish trend. Last week, gasoline inventories rose by 4.395 million barrels compared to the expected 2.695 million barrels. Nonetheless, the figure was better than the prior increase of 4.519 million barrels.

As for the distillates stock, the figure rose by 4.786 million barrels. Analysts had predicted an increase of 2.671 million barrels, which would have been a significant drop from the previous reading of +6.390 million barrels.   

On Tuesday morning, the API had released equally bullish figures. According to the institute, last week’s stockpiles declined by 5.821 million barrels. Experts had forecasted a fall of 2.7 million barrels. Similar to the EIA figures, API’s readings have been in the green for three consecutive weeks. In the previous week, the inventories had dropped by 1.663 million against the expected -1.5 million barrels.    

Oncoming OPEC monthly report

Today, crude oil prices will also be responding to the details of OPEC’s monthly report. The focus will be on the key issues affecting oil supply and demand at a global level. Besides, the alliance will present its outlook on the market in 2021.

Since the beginning of the year, crude oil prices have largely been on an upward trend. The rally started after the OPEC+ meeting held from 4^th January. On the next day, the upward momentum further gained shape as Saudi Arabia pledged output cuts of 1 million bpd. The announcement yielded a positive sentiment, which is still offering support to oil prices.  

Investors are also paying attention to the highly anticipated stimulus package. Today, Joe Biden will deliver his speech on the details of his government’s first stimulus package. The package is expected to be around $3 trillion. Bulls are hopeful that the amount will result in a higher demand for crude oil.