August crude oil saw another week of sideways, choppy trade as in remained in its relatively tight range of $38.50 to $41.25. Although the market did continue its sideways pattern, we are starting to see an increase in bullish fundamentals. Headlines on progress of a vaccine could continue to increase energy demand despite any possible shutdowns a second wave of the virus might have. We also saw a decline of 8.3 million barrels from API crude stocks this week which was more than the estimates. OPEC is currently meeting, and the big question is if they will decide to continue production restraints or begin to ramp up production again.
The August contract traded as high as $41.26 on Wednesday but was unable to hold those gains and is currently looking like it will continue to pullback into the end of the week. The crude market has made a great recovery from the springtime lows but is seeing difficulty in rallying over the $41-$42 area with all the uncertainties that remain. If we see OPEC decide to increase production, a second wave of the virus lead to another round of shutdowns, and demand start to decrease a test and even a break of support at last Friday’s low of $38.54 is possible. It seems despite getting the occasional positive news, currently, crude isn’t able to extend the rally higher.