Oil price is on the rise again at the news from the
EIA, the US Energy Information Administration, that the US crude oil
inventories are on decline for the past few weeks and it remains to be
consistent for a significant period of time.
That means the US road traffic is returning to
normal at a steady pace and factories are gearing up to get their output right.
There was no knee-jerk reaction from the markets to
the first presidential debate between President Trump and his rival, Joe Biden.
Neither did the latest opinion polls that usually are not in favour of the
incumbent.
Although the rise in price is a relief for weary
investors, it’s far from certain when it actually will go up to $50 a barrel in
the current circumstances. In this context, most of the OPEC members will still
struggle to balance their books.
The hierarchy of the OPEC members may have
understood the bitter truth that strategy of production cuts in order to shore
up oil price is easier said than done; most members need to find ways to
increase their revenue to keep their domestic troubles at bay.
The feeble demand for jet fuel is a major inhibiting
factor against the oil price recovery. Unfortunately, there are no signs of any
improvement on this front. Even politicians with enviable optimism hardly talk
about this worrying issue that potentially determines survival of thousands of
jobs in the whole sector – in the Western world and beyond.
Developing countries, such as India, feel that they
have gone past the peak of the pandemic. In proportion to the scale of
optimism, there are indications of heightened activities in the transport
sector and activities.
In this context, we will go beyond static demand of
crude oil in the next few weeks and price will rise slowly while following the
trend.
Let’s keep fingers crossed!
Charts that matter are here:
