On Wednesday, oil prices plummeted as industry data revealed that crude oil stockpiles increased more than expected. Last week, fuel stocks in the United States, the world’s largest oil user, surprisingly climbed.
After closing at the highest in seven years on Tuesday, Brent oil futures fell $1.13, or 1.3%, to $85.27 a barrel by 0902 GMT.
West Texas Intermediate (WTI) futures were down $1.44, or 1.7%, to $83.21 per barrel after gaining 1.1% in the previous session.
According to market sources quoting American Petroleum Institute data late Tuesday, crude oil stockpiles increased by 2.3 million barrels in the week ending. That was more than the 1.9 million barrel gain predicted. In comparison to expectations, gasoline stockpiles grew by 500,000 barrels, and distillate stocks surged by 1 million barrels. Prices are beginning to look overbought, according to analysts. They rose for the past eight weeks in Brent and ten weeks in WTI. Without additional optimistic headlines, which is probable given what we witnessed yesterday.
Global Oil Market And COVID-19
Storage tanks at the WTI oil delivery center in Cushing, Oklahoma, are more depleted than last three years. Yet, pricing for longer-dated futures contracts indicates that supplies will remain at those levels for months.
However, a patchwork recovery worldwide from the worst health crisis in 100 years, when the COVID-19 pandemic depressed demand for months on end.
“The global oil market is still at risk due to the coronavirus and its variants not being fully contained,” said Stephen Brennock of oil dealer PVM. A surge in cases over the summer pushed heavily on prices, which could happen again if the situation worsened.
China Traders Hunt for Coal Price Directions
Chinese coal dealers say they are rushing for pricing information on spot deals. They rely on personal communications as Beijing tightens its grip on the market to keep prices in check.
The National Development and Reform Commission, the country’s top economic planner, announced last week that it would probe coal and energy index providers for disseminating “fabricated” price information. In addition, the agency is researching a new method to keep coal prices within an acceptable range in the long run.
The increased scrutiny places additional strain on the Chinese coal trading community. It is already striving to keep up with the world’s largest coal user’s rapid market and regulatory changes. In June, China tightened restrictions for commodity index providers. It did this to cool red-hot prices for commodities ranging from copper to iron ore.
Benchmark Zhenzhou thermal coal futures were down 10% at 1,144 yuan around 0700GMT on Wednesday, marking the sixth consecutive day of losses following Beijing’s cooling measures. However, the price has more than doubled this year.
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