Concerns over the global spread of the Delta Covid variant are expected to weigh on crude oil prices. Crude oil prices are down substantially from their recent high of $76.98 on July 6, but they are still higher than their recent low of $65.21 on July 20.
Globally, the Covid-19 Delta variation is quickly becoming the most dominant strain. Delta is more transmissible, according to the WHO than the other varieties now on its radar, such as the alpha form, which was initially discovered in the UK in December, and the lambda variant, which was discovered in Peru in December.
The Delta varient currently accounts for 83 per cent of all new infections in the United States, including a substantial proportion of individuals who have not been vaccinated. According to Johns Hopkins University, the overall global Covid-19 caseload has surpassed 194 million, with more than 4.15 million deaths and more than 3.84 billion immunizations.
Economic growth and energy demand numbers from the United States were mixed on Friday. The July Markit manufacturing PMI in the United States unexpectedly increased by +1.0 to 63.1, beating estimates of -0.1 to 62.0. The July Markit services PMI, on the other hand, plummeted -4.8 to 59.8, missing forecasts of 64.5.
Crude oil prices were also supported by positive European economic statistics, which boosted energy demand. The Eurozone July Markit composite PMI increased by 1.1 points to 60.6, above estimates of +0.5 points to 60.0 and marking the fastest rate of expansion in 21 years. In addition, the ECB's Survey of Professional Forecasters boosted its Eurozone GDP prediction for 2021 to 4.7 percent.
The Transportation Security Administration (TSA) said that 2.23 million travellers passed through airport security checkpoints in the United States, the largest number since March 2020. This is likely to support crude oil prices.
For the first time since May, US energy companies added oil and natural gas rigs for the fourth week in a row, boosted by higher oil prices, albeit drilling growth has been modest as producers choose spending restraint. The number of oil and gas rigs is a leading indicator of future output. The number of oil rigs in the United States increased by seven this week to 387, the highest level since April 2020, according to Baker Hughes Co, an energy services company.
According to the CFTC's Commitments of Traders report for the week ending July 20, crude oil futures' net long fell by -50 356 contracts to 448 740 contracts. Long speculative positions fell by -43272 contracts, while short speculative positions increased by +7 084 contracts.
According to the EIA, US crude oil stocks were -6.8% below the seasonal 5-year average as of July 16, gasoline inventories were -0.2% below the seasonal 5-year average, and distillate inventories were -4.5% below the seasonal 5-year normal.
Meanwhile, US crude oil output remained constant week on week at a 14-month high of 11.4 million bpd, down -1.7 million bpd (-13.0%) from the record-high of 13.1 million bpd set in February 2020.
WTI Crude oil prices are encountering tough resistance near $72.68; however, near the 50-day EMA at $70.51 and the 100-day EMA at $66.64, immediate support can be found.