With the U.S. crude oil inventories being at their lowest point since March 2020, as well as technical indicators pointing towards the commodity being overbought presently, traders are beginning to believe the price of oil Is set for a pullback.
A U.S. government report detailing that gasoline inventories and crude supplies are dwindling, forecasting a more limited supply during the summer season. This report is the latest in a global trend of a tightening global crude market despite the uptick of demand as nations recover from the COVID-19 pandemic.
Prince Abdulaziz of Saudi Arabia has said that the OPEC+ alliance has an active role in containing inflationary pressures, and that the group should continue to remain cautious as the oil market has not recovered properly from the effects of COVID-19. The Delta Variant of COVID-19 in the U.S. is also poised to hamper oil price recovery, as further lockdowns are eyed off warily.
Additionally, the U.S. Energy Information Administration report released recently showed crude production has lessened over the last week.
These combination of factors may collate in oil price pullback, despite the futures in New York closing 0.3% higher on Wednesday.