PRESS RELEASE: Crude Oil Rises As US Presidential Inauguration Nears

On January 20, 2021, crude oil prices rallied even as the IEA predicted that its demand may decline in Q1 2021 and later this year. WTI futures are trading up by around 0.69% to trade at about $53.36.

In that context, Brent futures are trading at around $56.26 which translates to a 0.75% surge. The growing demand for the commodity in China has triggered the positive sentiment arising from Biden’s stimulus package. This week’s inventory data acquired from API and EIA will assist in the substantiation of the crude oil demand outlook.

China’s Crude Oil demand Surges

China is known to be the biggest crude oil importer globally. In that context, the growing demand for the commodity in the Asian economic powerhouse captures the attention of all investors who seek to trade oil.

Crude oil prices are now reacting to China’s growing demand. On January 18, the National Bureau of Statistics stated that the amount of crude oil processed in the nation’s refineries surged by 3% in 2020. In 2019, the yearly refinery output was almost 410,000 bpd. In 2020, the figures soared to 13.45 million bpd.

Last month, the output increased by around 2.1% which was a monthly record. Refineries in the country processed almost 14.13 million bpd. Growth in domestic consumption, coupled with the increase in exports, has contributed to China’s rising demand for crude oil.

Crude Oil Demand Review For 2021

One of the main outcomes of the OPEC+ meeting this month was the pledge by the biggest producer, Saudi Arabia, to cut production by around 1 million bpd. That move showed that OPEC is convinced that oil demand in 2021 will remain low until the COVID-19 crisis is resolved.

Additionally, the International Energy Agency (IEA) outlook has enhanced the sentiment. On January 19, the IEA cut its estimates for the global crude oil demand due to a severe health crisis and renewed lockdown measures in China and Europe.

Based on reports from the agency, crude oil demand will surge by 5.5 million bpd, a figure representing a decline of about 0.3 million barrels from December’s outlook. Additionally, the latest travel restrictions have made the IEA reduce its Q1 2021 estimates to 94.1 million bpd which is a figure down by 0.6 million barrels from the December predictions.

US Crude Oil Inventories Report

The investors’ attention is now on the week’s United States crude oil inventories data. These latest figures will help validate or downplay the IEA’s numbers. Today, API will present its weekly figures on the amount of crude oil held by American firms.

The data was seen to be bullish for three continuous weeks, resulting in the rise of crude oil prices. This last reading showed a decline of oil stockpiles by 5.821 million barrels. Analysts and experts had estimated a plunge of 2.7 million barrels, which would have been better compared to the previous -1.663 million barrels.

Furthermore, the EIA is set to release its weekly inventory data on January 22. For about three weeks now, the figures have been in the green. The most recent data showed an inventory drop of 3.247 million barrels. That plunge came as great news for crude oil prices. Notably, this week the market analysts expect a reading of about -0.280 million barrels.

Another notable event that will shape the crude oil demand outlook is Joe Biden’s inauguration and the stimulus package. In the event set for later today, most investors will be careful on the details of the $1.9 trillion relief package. The stimulus is expected to fuel economic activities, thus pushing crude oil prices higher.

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This is a syndicated post from https://www.cryptovibes.com/blog/2021/01/20/crude-oil-rises-as-us-presidential-inauguration-nears/