Oil petroleum prices halt their upward momentum this Wednesday thanks to the rising US crude stockpiles. But despite today’s contraction, futures are still expected to continue climbing in coming sessions thanks to strong US economic reports.
Aside from those fundamentals, prices are also still affected by the ongoing US-China ceasefire. Traders are moving cautiously due to the lack of enthusiasm from the Chinese government.
Since October, oil petroleum futures have steadily regained their footing in trading sessions. But today’s contraction is due to another build-up in the US crude inventories.
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WTI crude oil contract declined by 0.82% or 0.50 points in today’s trading sessions. Prices started the day already in negative territories but have continued to gradually descend as of writing.
Meanwhile, benchmark Brent oil prices fell by 0.61% or 0.40 points this Wednesday’s trading. Prices have also extended their run from $65.91 to as low as $65.67 in sessions.
Earlier today, the American Petroleum Institute showed a huge buildup in the weekly US crude inventory report. The unexpected news gave oil petroleum bears breathing space as oil prices.
Today’s contraction also cuts the fourth consecutive days of gains. But still, prices are on levels last seen about three months ago.
US oil petroleum inventories rose about 4,700,000 barrels in the week ending on December 13. Last week, the API only reported a 1,410,000-barrel build-up.
Today’s increase in inventories contradicts the US government’s projections of a drawdown of about 1,300,000 barrels. The said projections are expected in the US Energy Information Administration’s report coming next.
In the week prior, the EIA reported an oil petroleum stockpile buildup of 822,000 barrels. That also comes against expectations of a 2,760,000-barrel drop.
Booming US Economy
Yesterday, oil petroleum prices received a boost from the impressive improvements in the US economy. As if it was just last week when the US produced dull figures, the economy is starting to redeem itself just in the nick of time.
Yesterday, the United States Census Bureau reported a surprise increase in homebuilding permits. The November figures came in better than expected, peaking to 12 and a half year highs.
US building permits rose to 1.482 million from 1.461 million prior, beating projections of 1.410 million contractions. The last time that the index reached that level was back in 2007.
At an annual pace, the US house starts increased by 3.2% in the seasonally adjusted rate. Single-family construction figures are also climbing to its 10-month high.
Fortunately for bulls, these encouraging results are preventing oil petroleum prices from plummeting deeper in trading sessions.
Major companies and agencies in the United States released their revised oil petroleum price forecasts for 2020. With the latest deeper cuts from OPEC, the marginal improvements in the trade war, and the promising economic activities in mind.
However, prior to OPEC’s meeting, agencies were already calling for deeper oil petroleum production cuts. This might have a significant impact on their projections, limiting their expected gains for 2020.
One of the agencies includes JP Morgan who expects global demand to pick up 1 million BPD in 2020.