Crude Stockpiles Fall While COVID Cases Climb

The rise in COVID-19 cases has not put a damper on the United States oil demand. According to the American Petroleum Institute (API), United States crude oil stocks saw a draw of 4.7 million barrels for the week ended July 23. This increase in demand has come while the overall number of COVID cases has increased at an expedited rate and some countries have initiated partial lockdowns in response to their cases. The impact of these decision on demand is yet to be seen, and it’s unclear whether or not other countries will follow in their steps.

Yesterday, the CDC updated their mask recommendations in response to the rise of cases within the US. They recommended Americans, including the fully vaccinated, to start wearing masks indoors again in areas with high transmission rates. Many Americans are catching up on their lost time and traveling the country, but the new policy might slow their enthusiasm. The US has seen its seven-day average for new cases increase to 44,792, which is the most since May 3^rd of this year.

With this in mind, many analysts are unsure what to expect. While the demand of oil is currently outpacing supply, there is concern that the new variants will lead to a drawback on demand and the US to potentially follow in the steps of Australia, which has shut down a major city to try and stop the spread of COVID. On the other hand, many believe that the ever-increasing vaccination rate will help limit the spread and, thus, expect rising oil demand to continue. With all of this in mind, there is still an expectation that demand will continue to overshadow supply, even with the recent OPEC+ supply increases. It may be too early to tell how exactly things are going to play out as this virus has shown that it can spread quickly throughout populations.