Falling oil demand and bearish US inventories are not of any good to WTI investors. However, a deeper slide might be a great place to enter the trade…

Fundamental Analysis

The Organization of Petroleum Exporting Countries (OPEC) has downgraded its estimate of world oil demand for 2021. The demand has been lower than expected so far despite strong prospects for the end of the year.

In fact, in its monthly report, the cartel estimates that oil demand will rebound by 5.82 million barrels per day (mb/d) this year, while it forecast 5.96 mb/d last month.

Global crude demand is therefore expected to reach 96.6 mb/d this year.

As a reminder, the member countries of the cartel and their allies (OPEC+) chose at the beginning of October to renew their strategy of a modest increase in production, ignoring the calls to open the floodgates further and thus propelling prices upwards.

By the way, the two oil-producing countries that contributed the most to this increase are Nigeria and Saudi Arabia.

U.S. API Weekly Crude Oil Stock

Inventory levels of US crude oil, gasoline and distillates stocks, American Petroleum Institute (API) via Investing

Regarding the API figures published on Wednesday, the increase in crude inventories (with 5.213 million barrels versus 140k) was more than expected — this implies weaker demand and is bearish for crude prices. However, we have yet to see whether or not these figures are confirmed by the weekly Energy Information Administration's (EIA) report published later today.

If this scenario is confirmed by the EIA’s figures later today, then the black gold will be well set for a deeper correction, possibly back to its lower support levels – levels which, by the way, were provided yesterday to our premium subscribers, along with our most recent projections.

WTI Crude Oil (CLX21) Futures (November contract, daily chart)

Finally, to wrap up today’s article, we have seen a few choppy days on the energy markets with some contradictory data to interpret. This uncertainty usually leads to a ranging market, which can be an interesting place for some shorter-term trades. For a longer-term trade horizon, it is necessary to combine some fundamental analysis with your charting and be patient.

This is exactly what we do here, and we are happy to help you surf on the waves of uncertainty! You can find more information about exact positions and outlooks in our premium Oil Trading Alerts.

Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Oil Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

Thank you.

Sebastien Bischeri
Oil & Gas Trading Strategist
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The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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