Closing prices for crude oil, gold and other commodities

Andrew Cummings
August 5, 2020

The Energy Information Administration is expected to report on Wednesday that US crude stockpiles decreased by 3.35 million barrels last week, according to a Bloomberg survey.

Crude oil production fell by 16.6% in May as efforts to mitigate the spread of COVID contributed to a drop in demand.

"Investors are anxious about oversupply as the OPEC+ is due to start reducing production cuts this month and a recovery in oil prices from record lows is likely to encourage US shale producers to ramp up output", said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

Oil held near $41 a barrel in NY after the longest run of gains in six weeks on signs USA crude stockpiles extended declines. More crude oil is produced in Texas than in any other state or region of the United States; Texas accounted for 41% of the national total in 2019.

Data from the American Petroleum Institute (API) suggest the weekly Weekly Crude Oil Stock depleted 8.587 million barrels during the week ended on July 31.

Oil has been stuck in a narrow band since June, with rising virus infections in many countries increasing concerns about a renewed hit to the global economy. Traders are now shifting their focus on the US coronavirus aid package, the inability to contain the spread of coronavirus and this week's oil inventories numbers.

Rising crude supply from the group dubbed as OPEC+ worries investors that glut of oil supply in the world is set to increase to further put pressure on oil prices.

The decline came as an OPEC+ deal enters its second phase in August, after a prolonged period of massive daily curbs of 9.7 million barrels that were aimed at offsetting a steep slump in demand due to the coronavirus pandemic. Texas, Oklahoma, North Dakota, Pennsylvania, and New Mexico each had record monthly drops in natural gas production in May. Before the COVID-19 pandemic and the economic downturn, USA crude oil production averaged 12.8 million b/d in the first two months of 2020.

EIA forecasts that USA marketed natural gas production-which it defines as gross withdrawals of natural gas less natural gas used for repressuring reservoirs, quantities vented or flared, and nonhydrocarbon gases removed in treating or processing operations-will continue to decline for the remainder of 2020.

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