The US crude stocks, according to the EIA, the
Energy Information Administration data, have gone up by a few million barrels,
bucking the trend that was downward for months.
Since this is a major factor in determining the
crude oil price, its effect will be felt in the oil markets in the coming days.
It means the oil rallies that we witnessed so far may become relatively static.
It doesn’t mean yet another crash; on the contrary,
it will be back on upward trend in a few weeks.
The uncontrollable Coronavirus infection rate in the
US may be a contributing factor for inventory-build up in the US. Apart from
that, no global factor, significant enough for causing a major impact, is not
at play at present.
Since the US health regulator gave the green light
for the Pfizer vaccines, the mood, both among the general public and the
investors, will change in proportion to the promised results of vaccination
campaign.
There are, meanwhile, some countries in the world that
do not show any sign of decline in the demand of oil. Brazil and China, for
instance, despite being affected by Coronavirus very badly, clearly show that
demand for oil has gone up. Even in India, the demand has picked up – almost, to
pre-pandemic level.
On a positive note, the markets in general and oil
in particular, will welcome the normalisation of ties between Morocco and
Israel. If this once-unthinkable trend continues, the Middle Eastern political
landscape will change beyond recognition in a matter of years – proving the oil
markets with an enviable platform to stand on in a volatile region.
In this context, US inventory stock will come down
in a matter of weeks towards the end of winter that in turn will boost the
crude oil price – at least, closer to what it was before the pandemic.
