Oil Price Rallies 4% at Low Level but Demand Sees Weak Momentum

WikiFX News (4 Aug)- Yesterday (Aug 3), WTI rallied and recovered to $41 after establishing firmer footing at $40. Nevertheless, oil price may still struggle to test $40 barrier in the wake of a gloomy demand outlook.

According to JPMorgan analyst Kaneva, there‘s a chance that crude oil demand could find a new normal at about 90.50 million barrels a day if it remains at the level of July till the end of this year. Fed’s Kaplan also indicated that we will have a very challenging oil market for next 6-12 months because of excess inventory. The recovery in crude oil demand will stagnate because of the soaring confirmed cases of the epidemic.

Certainly, the bullish economic data in the short term is not strong enough to sustain a further step in oil prices from the current level. This week, market will fully test the low risk appetite started from last week, which makes oil prices likely to ease back to the level of $40.0 in the near term. .

Today, investors are suggested to focus the RBA's interest rate decision for August and U.S. Durable Goods Orders and Factory Orders in June. On Wensday (Aug 5), U.S. API will be released, which may exert pressure on oil prices if its inventory cannot see a decrease as sharp as last week.

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