Oil Price Fundamental Daily Forecast – Prices Drop after API Gasoline Data Shows Surprise Build
U.S. West Texas Intermediate and international-benchmark Brent crude oil finished lower on Tuesday in a lackluster trade. Prices were capped by rising output and exports from large producers and underpinned by news of lower crude supplies from Saudi Arabia.
September WTI Crude Oil closed at $49.17, down $0.22 or -0.45% and October Brent Crude Oil finished at $52.14, down $0.23 or -0.44%.
On the bullish side of the equation, Saudi state oil company Aramco will cut allocations to its customers worldwide in September by at least 520,000 barrels per day (bpd), sources familiar with the matter told Reuters on Tuesday.
On the bearish side, production from Libya’s 270,000 bpd Sharara field is returning to normal. Reuters is also reporting that Libya pumped 1.03 million bpd in July. Additionally, OPEC output hit a 2017-high in July and its exports were at record levels.
Forecast
Crude oil prices are under a little pressure early Wednesday. Traders are reacting to the American Petroleum Institute’s (API) report released late Tuesday.
According to the API, crude oil inventories dropped 7.839 million barrels during the week-ending August 4. Analysts were looking for a modest draw of about 2.272 million barrels.
This news should’ve been bullish, but the API report also showed gasoline inventories rose by 1.529 million barrels for the week-ending August 4, compared to analyst expectations for a draw of about 1.5 million barrels.
In other news, distillate inventories rose this week by 157,000 barrels, while inventories at the Cushing, Oklahoma, site increased by 319,000 million barrels.
The charts indicate that the market could remain rangebound as long as the bullish and bearish news continue to offset each other.
On Wednesday at 1430 GMT, investors will get the opportunity to react to the U.S. Energy Information Administration (EIA) report on oil inventories. It could prove to be volatile because of the mixed API data.
Analysts expect the EIA report to show a draw of 2.6 million barrels. However, like the API report, the direction of the market will likely be determined by the gasoline inventories number.
This article was originally posted on FX Empire
