Oil prices are dropping to their highest level in several years

Mohammed Abdelkhalik
October 20, 2021
Oil prices

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Oil prices fell during today’s trading session in the American market, to give up the highest levels in several years, recorded earlier in trading, and are close to recording their second daily losses in the last three sessions.

This decline comes under pressure from the rise of the US dollar index against most international currencies, In addition to the report of the American Petroleum Institute, in which it indicated that commercial crude stocks in the United States, “the largest consumer of oil in the world,” recorded a new rise during the past week, while market participants awaited later today official data on stocks and production levels within the weekly report of the US Energy Information Administration.

Oil prices fell during today trading

Oil prices

West Texas Intermediate (US) crude oil fell by about 1.25% until 09:50 GMT, to trade at the level of 81.40 US dollars per barrel, from the opening level of today’s session at 82.43 dollars, and reached the highest price at 82.58 dollars per barrel.

The global benchmark “Brent crude” also decreased by 1.3 percent to the level of 84.04 dollars per barrel, compared to the opening level at 85.16 dollars, and recorded early in the session the highest price at 85.22 dollars per barrel.

At the conclusion of trading on Tuesday, US crude managed to achieve a gain of 0.2%, and Brent international crude also gained 1.2%, thanks to expectations of an acceleration in the growth of global demand for fuel.

The US dollar index rose during today’s session by about 0.1%, to approach towards recording its first daily gains during the last six sessions, but it is still near its lowest level in three weeks recorded earlier this week. Investment is available, especially after the new jump in the long-term US Treasury bond yield.

As we know that the current rises in the dollar index negatively affect the movements of oil prices and the rest of the commodities and other metals priced in dollars according to the inverse relationship between them.

The yield of the ten-year US Treasury bond rose today by 2.1%, in the fourth consecutive daily gain, thus hitting its highest level in five months at a rate of 1.673%, which enhances investment opportunities in the US currency.

US inventory report

The American Petroleum Institute announced in its preliminary data released yesterday, that commercial crude stocks in the United States rose during the “last week” ending on the fifteenth of this October by about 3.3 million barrels, in the fourth consecutive weekly increase, exceeding economic expectations that were referring to A rise of 2.0 million barrels.

According to these data, the total commercial crude stocks in the country rose to about 432 million barrels, the highest since the week ending on the twenty-seventh of August 2021, which indicates a clear weakness in the levels of withdrawal and actual consumption in “the largest consumer of crude in the world.”

Author Mohammed Abdelkhalik

Professional Trader and Analyst, economist in Financial and Forex market since 2004.holds an MBA from the American University in Egypt. Mohammed works as an economic writer and technical & fundamental analyst for many international Forex and financial trading companies in both English and Arabic on a daily basis.