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Oil Likely To Track Equities After Recent Correction

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WTI Crude oil futures fell last week after breaking below $40 per barrel as equities remained weak and US dollar index stabilized around two month high. The US Energy Information Administration (EIA) reported an oil inventory draw of 1.6 million barrels for the week to September 18 following a draw of 4.4 million barrels for the previous week. Crude stocks at the Cushing, Oklahoma, delivery hub for WTI Crude rose by 4,000 barrels in the last week, EIA said. US Crude production eased to 10.7 million barrels per day. Oil was somewhat supported by and managed to close just above $40 per barrel. Overall sentiments remain steady in oil. The OPEC+ production cuts and curtailments in the United States are set to help global inventories to continue drawing down for the rest of the year and most of next year, resulting in a relatively balanced market by the end of 2021, the US Energy Information Administration (EIA) said in a latest update. Good fund buying and a possible pullback in equities after recent tumble could also benefit oil.

Oil prices dipped again on Monday as rising

Oil prices dipped again on Monday as rising coronavirus cases upset hopes for a smooth recovery in fuel demand, with crude on track for its first monthly fall in many months after slipping last week. Brent is on track to fall for the first month in six while WTI is headed for its first monthly loss since April as renewed mobility curbs in various countries following more coronavirus cases cloud the outlook on fuel demand recovery. New COVID-19 case numbers are accelerating in major U.S. states, renewing fears of mobility restrictions challenging the ongoing oil demand recovery in the last quarter. More crude is also being exported from OPEC producers Iran and Libya despite efforts by the Organization of the Petroleum Exporting Countries and their allies to limit output. Still, OPEC Secretary General Mohammad Barkindo said on Sunday that commercial oil inventories in OECD countries are expected to stand only slightly above the five-year average in the first quarter of 2021, before falling below that level for the rest of the year. In Norway, one of the largest oil producers outside OPEC, a workers’ strike which may take place on Sept. 30 is threatening to cut Norway’s production by 900,000 barrels per day, the Norwegian Oil and Gas Association (NOG) said on Friday.

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