Fuel consumption in the USA is still weak as the pandemic hinders travel and economic recovery
The number of new COVID-10 cases worldwide rose sharply this week
Oil buyers will be eager to re-test $42.30 after having succeeded in closing over $40.00
Crude oil prices continued to move sideways this week as buyers struggled with an increase in the number of new coronavirus cases worldwide.
Fundamental Analysis: Rise in COVID-19 Infections
The number of COVID 10 cases has skyrocketed in the United States, especially in the Midwest and New York City, which is considering restoring decommissioning mandates. To date, the virus has claimed over 200,000 lives in the United States.
“There is this second wave of fear that is currently flooding the oil market, and it is holding us back,” said Phil Flynn, senior analyst with Price Futures Group in Chicago.
Fuel consumption in the country is still weak as the pandemic hinders travel and economic recovery. The 4-week average fuel consumption was 9% lower than in the same period last year.
Crude oil production in India fell 26% year-on-year in August, mainly due to the pandemic that is hampering industrial and transportation operations.
In addition, new crude oil entering the markets could lead to increased supply and lower prices. The number of U.S. oil and gas drilling rigs increased by 6 to 261 in the week to September 25, as Baker Hughes Co.
Libya has increased production, while Shell has temporarily reserved the first crude oil tanker for loading at the Zueitina terminal in Libya. In other countries, Iranian oil production increased significantly in September despite US sanctions.
Technical analysis: Lateral actions continue
Crude oil prices closed the week 1.92% lower, a week after gaining nearly 10% to close above the $40 mark. Importantly for buyers, the week closed above both the 100 DMA and 200 DMA mark.
Crude Oil Daily Chart (TradingView)
The bulls are now hoping that this bullish close will be enough to generate more sustainable gains this week. Oil buyers will be eager to retest the $42.30 mark as the meeting of two daily moving averages near the $39.00 mark will provide support.
Oil prices have dropped by nearly 2% this week as the number of new Covid 19 cases worldwide has risen sharply and oil supplies are expected to increase in the near future.