Crude Oil prices dropped Wednesday morning at London’s trading session.
This follows growing concerns over energy demand from the world’s biggest economy, amid delayed talks on the post-COVID-19 economic stimulus package.
With Crude oil traders keeping one eye on a key OPEC+ meeting scheduled later today, Brent crude futures dropped about 0.75% to trade at $45.12 a barrel as of 05.37 am GMT. Similarly, the West Texas Intermediate futures also lost about 0.61% to trade at $42.63 per barrel.
Stephen Innes, the Chief Global Market Strategist at AxiCorp gave a vital analysis of why oil traders are focused on energy demand rebalancing. He said:
“Oil gave ground in early Asia after a report showed a disconcerting increase in gasoline stocks as OPEC+ returns more barrels to market in August.
“It’s challenging to make heads or tails out of the oil market these days. Other than to conclude that the most obvious fact is that the market is struggling to make new highs as demand concerns remain tethered to the hip of the coronavirus worries as OPEC returns 1.5 million barrels per day this month.”
Stephen Innes expanded his thought on why the world’s largest economy crude oil stockpiles, raised concerns among traders. He said ;
API reported a big build in gasoline inventories, which has somewhat taken the edge off the bullish market sentiment.
“The timing could not have been much worse as we are entering the home stretch for peak driving season in the US. Summertime builds are never received well, but particularly towards the end of this summer as there is some concern the virus could rage again during colder winter months in the northern hemisphere and further crimping gasoline demand.”