The unsettled crude oil markets seem to have got a
mood booster, having been through some chaotic market speculations - at last.
With the release of the latest US inventory data by
the EIA, US Energy Information Administration, the markets found some hope and
the price of crude oil got back into the ‘green’ realm.
The EIA disclosed that the US crude oil inventories
dropped by 4.1 million barrels during the week ending July 23; the predicted draw
for the same period by the API, American Petroleum Institute, was 4.728 million
barrels.
It was substantial, given the rising Coronavirus
infections in the US. Its emotional impact on the crude oil markets was crucial
and reaction was understandable.
The price has been rising, but at a slower rate,
perhaps, due to the anxiety of the investors about the rising uncertainties in
the Middle East.
The looming departure of the US troops from Iraq and
the prospect of new actors in the region filling in the vacuum thus created are
causing serious concerns.
“Will the Iraqi forces manage to control the vast
oil fields in the event of total withdrawal of the US forces from the country?”
is something that every unbiased analyst ponders at present.
Moreover, the hope of reviving the JCPOA, 2015 Iran
nuclear deal, which has been oscillating wildly between two opposing political
realties in the last few months, still wields some influence over the crude oil
markets; the hyperactivity in the Iranian oil sector in recent months does not
let markets give up on the hope – at least at the sentimental level.
On a military front, the Houthi attacks against
Saudi oil facilities continue unabated; the Arab coalition neither managed to
reduce the frequency nor found a way around the growing menace; a condemnation
following every single attack does not solve the problem either.
The rapidly rising infections of the Delta variant
of the Coronavirus, coupled with evolving political developments in the Middle
East are the two key factors that affect the crude oil markets at present.
The fall of US crude oil inventories, in this
context, came as a positive signal for the markets to lift the gloomy curtain
up across the sector.
