Crude oil prices are holding near $74.63 which is marginally lower from the recent high of $76.98 registered on July 6. A renewed concern about economic activity in the US is likely to keep a cap on oil prices. A fresh spread of COVID-19 variants is likely to derail the global economic recovery.
The US infection rate has increased after the 7-day average of new US Covid infections rose to a 1-1/2 month high Sunday of 19,479. The overall global Covid-19 caseload has topped 187 million, while the deaths have surged to more than 4.03 million and vaccinations soared to over 3.46 billion, according to Johns Hopkins University.
OPEC+ ministers delayed a meeting on output policy as the United Arab Emirates hesitated at a plan to add back 2 million barrels per day (BPD) in the second half of the year. UAE and OPEC+ postponed the ministerial meeting to Friday. OPEC+ reached a preliminary agreement to raise production by 400,000 BPD each month from August through December; however, the UAE reportedly wanted a higher production quota and blocked an agreement, forcing the meeting to be adjourned until Friday.
Crude prices also found support from delays in Iran's nuclear talks. The seventh round of talks with world diplomats over Iran's nuclear program has been delayed with no resumption date fixed. Easy oil supply from Iran is delayed as talks are not progressing.
As per the weekly inventory report from EIA, US crude oil inventories as of July 2 were -6.9% below the seasonal 5-year average, gasoline inventories were -1.4% below the 5-year average, and distillate inventories were -5.3% below the 5-year average.
Meanwhile, US crude oil production in the week ended July 2 rose +1.8% w/w to a 13-month high of 11.3 million BPD and was down by -1.8 million BPD (-13.7%) from the February-2020 record-high of 13.1 million BPD.
As per Baker Hughes reports that active US oil rigs in the week ended July 9 rose by +2 rigs to a new 1-1/4 year high of 378 rigs.
According to the CFTC Commitments of Traders report for the week ended July 6. the net long for crude oil futures slumped -25 139 contracts to 497 351 for the week. Speculative long position declined -24 799 contracts, while shorts added +340 contracts.
Crude oil is likely to face stiff resistance near $75.83-$76.73 while immediate support level could be seen around 20 days EMA at $73.35 and 50 days EMA at $70.58.