- WTI fell from highs near $ 63.00 to briefly below $ 61.00, but has recovered in recent trading.
- Dovish comments from Fed Chairman Jerome Powell have helped lift stocks and crude oil from lows initially touched.
Crude oil markets entered the Asia Pacific session on Tuesday with a bullish tone, with futures contracts from the previous month for the US benchmark for light sweet crude oil, called West Texas Intermediary (or WTI), rising to a level of $ 63.00. However, global stock markets were liquidated at the start of the European trading session and are still trading in the red as European trading comes to a close. This has put downward pressure on the crude oil markets, with the WTI falling below the $ 62.00 level and even briefly below $ 61.00.
Crude oil factors
Federal language and stock market price action aside, the fundamentals on the demand side continue to look broadly positive; Vaccine launches continue in major economies (the US is receiving huge deliveries of vaccines from Pfizer and Moderna over the next few weeks) and both the US and the UK appear to be on the way back towards reopening. British Prime Minister Boris Johnson released the country’s “Roadmap to Recovery” which could see most of the economic restrictions lifted in June and could bode well for European international travel (which means a increased demand for jet fuel), if Covid-19 variant concerns allow. Hopes for stimulus as Congress moves forward with the $ 1.9 trillion package from U.S. President Joe Biden and begins discussions on the multi-trillion follow-up infrastructure investment bill, combined with the Growing expectations of a rapid and synchronized global economic recovery by the end of the year also remain optimistic factors.
Supply-side factors are a bit more mixed; Texas crude oil production appears to be returning more slowly than market participants had anticipated and the impact the recent weather disruption will have had on weekly crude oil inventory data has yet to be seen. Meanwhile, crude oil markets are bracing for next week’s OPEC + meeting and the potential prospect of a showdown between the Saudis and the Russians over how much to increase production. Most expect the cartel to reduce production quotas by about 500,000 barrels per day.