Oil Price Prediction – Oil Markets Rebound After Sell-Off

Key Insights

• Crude inventories grew by 8.2 million barrels, while gasoline inventories declined by 2.5 million barrels. 
• Domestic oil production remained unchanged at 12.1 million bpd, which was bullish for oil markets. 
• WTI oil remains stuck in the wide $100 – $120 range. 

WTI Oil Moved Back Above The $100 Level

WTI oil rebounds after the major sell-off that pushed it below the $100 level. EIA has recently released its Weekly Petroleum Status Report, which served as an additional bullish catalyst for the market. The report indicated that crude inventories increased by 8.2 million barrels from the previous week. Analysts expected that crude inventories would decline by 1 million barrels.

The increase in crude inventories was driven by rising crude oil imports, which increased by 0.8 million bpd from the previous week.

The strong growth of crude inventories could have served as a bearish catalyst for oil markets. However, other important catalysts were bullish. Gasoline inventories declined by 2.5 million barrels. At current levels, gasoline inventories are about 8% below the five-year average for this time of the year.

Meanwhile, domestic oil production remained unchanged at 12.1 million bpd. This is a bullish development for oil markets as it shows that domestic oil producers are not ready to increase production at a fast pace despite high oil prices.

What’s Next For WTI Oil?

Today’s trading shows that WTI oil remains stuck in the $100 – $120 range. The recent attempt to settle below the $100 level was unsuccessful, and WTI oil quickly moved back into the previous trading range.

While recession fears have put significant pressure on the price of oil in recent days, oil markets remain tight. At this point, there are no signs of demand destruction. In addition, domestic oil production is not very sensitive to high prices.

Traders will remain focused on global economic outlook in the upcoming trading sessions as a potential recession remains the key threat to oil markets. Japan has recently announced that it is dealing with the seventh wave of coronavirus, so healthcare news will also need monitoring.

For a look at all of today’s economic events, check out our economic calendar.