Concerns about a future worldwide recession caused WTI oil to drop below $100 a barrel. Copper, which is equally susceptible to economic forecasts, has also fallen to new lows.
In recent trading sessions, the risk for a recession has been the primary topic of conversation on commodities markets. High inflation exerts considerable pressure on economies, and it remains to be seen if oil demand will be robust enough to sustain the recent $100 – $120 range.
A second bearish factor is also at play. Coronavirus. Fears of lockdowns provide an extra negative trigger for oil prices as China continues to combat outbreaks of the disease.
Recently, the number of daily coronavirus cases in Italy has surpassed 100,000. There is no discussion of more limitations during the lucrative summer season, but the current scenario poses a threat to economic activity and oil consumption.
The domestic oil production data will have a significant influence on oil price dynamics.
Tomorrow, investors will have the opportunity to see the EIA Weekly Petroleum Status Report. The data is anticipated to reveal that oil inventories fell by 1,1 million barrels compared to the previous week.
Traders will likely concentrate on the statistics on domestic production. According to the previous data, domestic output grew from 12 million to 12.1 million barrels per day. Increased domestic output is unfavorable for oil markets since it indicates that producers have begun to respond to high prices.
The market may also consider gasoline inventories, which are expected to decrease by 1,600,000 barrels. The patterns of gasoline stocks demonstrate the robust demand for gasoline during the driving season.
Typically, the EIA report has a substantial influence on the dynamics of oil prices. However, traders will also need to keep an eye on global commodities markets, as worries of a recession are now the primary driver of oil prices.
