Oil Prices Losing Steam amid Soft Energy Demand

A larger-than-expected gain in U.S. crude oil stockpiles pushed the prices of crude oil below their December highs; however, oil bulls kept the game on, taking to account the macros hinting at positive COVID-19 vaccines news triggered hopes of a recovery in fuel demand in the mid-term and to an extent curbed deep losses in the crude oil market black.

At the re-opening of the London trading session, the British based oil contract, Brent crude futures traded around $48.62, and not forgetting the West Texas Intermediate futures was slightly down to trade at around $45.40. Both Brent crude and WTI futures however remained above the critical $45/barrel price mark.

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Recent data retrieved from the American Petroleum Institute revealed a 1.141-million-barrel gain in U.S. crude oil stockpiles for the week ending December 4.

The surge in oil inventories at the world‘s largest economy was much larger than the 1.514-million-barrel drop some energy experts had earlier anticipated, however, it showed that energy demand was picking up, taking to account the previous week’s gain of 4.146-million-barrel.

It now becomes obvious when digesting the recent price action at the crude oil market, that although the deal achieved by OPEC+ has limited the spirally drop of oil prices, the bulls are now battling hard to push up even with positive news on the COVID -19 vaccine front, meaning though it seems the worst-case scenarios for the black liquid hydrocarbon have all but subdued, the main macro for oil prices in rallying up would be how effective the prevailing COVID-19 vaccine distribution network works out, taking to account that the Northern Hemisphere is already in winter, coupled with the bias that the number of COVID-19 caseloads seems to be going out of control.

Still, the outlook for the crude oil market in the midterm reads brighter on the bias that as more people in the general population get vaccinated, social mobility will increase substantially.

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