In yesterday's session on Tuesday, August 11, 2020, Oil prices finished down slightly as the U.S. Dollar limited its losses in a declining market and awaited the release of U.S. Oil Inventories. In the aftermath, Donald Trump tried to intervene to support WTI.
As mentioned in the introduction, Oil prices ended down Tuesday before the release of the U.S. inventories report.
On the London market, the price of a barrel of North Sea Brent for delivery in October fell 59 cents or 1.1% of its value and ended the session at $44.50. In the New York market, a barrel of WTI for September delivery fell 33 cents or 0.8% of its value and ended the session at $41.61.
During the session and as the US dollar regained some ground, the trend was reversed. Indeed, the strength of the dollar has led to a higher cost for barrel purchases and thus a drop in demand.
According to analysts, the EIA report, or U.S. Energy Information Agency, the inventory data to be released today is likely to show a further decline in crude oil reserves. The agency also released a monthly report yesterday in which it revised upwards its forecast for the average price of Brent and WTI in 2020. Its estimate of total U.S. crude oil production has been revised down to only 11.3 million barrels per day.
It should be recalled that at the beginning of the session, the price of black gold had benefited from the optimism of the financial markets following the new economic stimulus programs announced by Donald Trump.
Last weekend, Saturday, U.S. President Donald Trump signed four executive orders that provided for a wage freeze, an extended unemployment benefit of $400 per week, protections for tenants threatened with eviction and a deferral of student loan payments.
However, it is possible that these measures could be challenged in court since Congress is the one that is holding up most of the country's budgetary decisions.
In addition and to counter the decline in demand for crude oil, OPEC and OPEC + have decided to sharply reduce crude oil production since May with limits set by country. Also noteworthy is Iraq's firm determination to reduce its production, which will boost investor confidence. Indeed, this country produced more than its quota during the spring is currently making a lot of effort to catch up.