Crude oil price: here’s what to expect with US inventory data on the horizon

Crude oil price is on a decline amid rising COVID-19 cases. Later in the day, the market will be reacting to US oil inventory data ahead of the OPEC+ talks on Thursday.

Rising COVID-19 cases

The spread of the aggressive Delta variant, which was first recorded in India, has triggered fresh mobility restrictions in different parts of the world. Subsequently, investors are concerned over the probable easing of global oil demand. Portugal and Spain, which are key travel destinations for Europeans during the summer period, have enacted restrictions that will affect unvaccinated Britons. Besides, the tightened restrictions in Australia are expected to affect about 80% of the populace. At the same time, the rising COVID-19 cases in the UK have slowed talks regarding a travel corridor connecting the UK to the US.

Reports of rising coronavirus cases come two days ahead of the OPEC+ talks. The meeting’s main focus will be on the output policy for August. Economists expect the coalition to increase production by about 500,000 bpd in August. The moderate increase will signal the tightened growth in oil demand by key consumers like China and the US.

US oil inventory data

Later in the day, crude oil price will be reacting to the weekly US oil inventory data. In the previous release, the American Petroleum Institute (API) indicated that oil stockpiles had dropped by 7.199 million barrels for the week ending on 18^th June. A lesser draw may result in crude oil price rising modestly as investors await confirmation of the trend from EIA on Wednesday.

In the previous release, EIA released a better-than-expected figure, thus boosting prices. This week, analysts expect a lesser draw of 4.460 million barrels. As for gasoline inventories, the forecasted decline of 0.880 million barrels is lesser than last week’s 2.930 million barrels.    

Brent oil price prediction

Crude oil price has extended its losses from the previous session. At the time of writing, the benchmark for global oil was down by 0.56% at 74.16. On Monday, it hit an intraday high of 76.57, which is its highest level since October 2018. It has since plunged to an intraday low of 73.75 earlier on Tuesday. On a two-hour chart, it is trading below the 25 and 50-day EMAs as they both converge at around 75.11.

I expect crude oil price to rebound to 75.11 where it is likely to experience some resistance. Above that level, the next target will be at 76.00. On the flip side, the prices may drop further to find support at 73.16.