U.S. West Texas Intermediate and internationally-favored crude oil futures finished slightly higher on Wednesday as investors prepared for the release of weekly inventories data from the American Petroleum Institute (API) on Wednesday and the U.S. Energy Information Administration (EIA) on Thursday.
Oil prices rose for a third day on Wednesday as OPEC forecast higher demand for 2018 and heightened tensions in Kurdistan supported prices.
December WTI Crude Oil settled at $51.60, up $0.37 or +0.72% and January Brent Crude Oil closed the session at $56.73, up $0.37 or +0.66%.
In addition to forecasting stronger demand for its oil in 2018, OPEC said production cuts by producing nations were clearing the global crude glut.
Saudi Arabia said it pumped 9.97 million barrels per day in September, up from August, but still below target.
In other news, the world’s second largest crude trader Glencore said the market can absorb the volumes along with those from the North Sea and West Africa.
“I think the market is able to absorb that 2 million bpd of U.S. exports easily,” Glencore’s head of oil trading Alex Beard told the Reuters Global Commodities Summit. “I don’t think there are many losers out there.”
His comment was in response to last week’s U.S. EIA report which showed a 1.98 million barrel jump in U.S. exports. Traders said this was related to the high price of Brent crude oil which was made WTI crude a more attractive alternative.
Prices are under pressure early in the session on Thursday after the API said its data showed U.S. crude stocks rose unexpectedly last week, while gasoline inventories decreased and distillate stocks increased.
According to the API, crude inventories rose 3.1 million barrels in the week to October 6. Analysts had expected a draw of 2 million barrels.
The EIA report on Thursday is expected to show a 1.9 million barrel draw. Bullish traders are hoping U.S. producers slow down production and make further progress on inventory cuts. However, the actual supply/demand picture may not be clear at this time because of the impact of Hurricane Irma.
Geopolitical concerns could drive prices higher over the near-term. Iraqi government forces and Iranian-trained Iraqi paramilitaries are “preparing a major attack” on Kurdish forces in the oil-rich region of Kirkuk and near Mosul in northern Iraq, the Kurdistan Regional Government said on Wednesday.
Although an Iraqi military spokesman denied any attack, traders are taking no chances at this time with speculators buying and shorts covering.
The daily chart indicates that upside momentum could increase on a sustained move over $51.71. Momentum will shift to the downside on a sustained move under $51.27.
This article was originally posted on FX Empire
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