Oil Price Fundamental Daily Forecast – Rangebound Trade Until OPEC Announces Production Cut Extension
U.S. West Texas Intermediate and international-benchmark Brent crude oil fell over 1 percent on Thursday as investors continued to book profits from the spike to the upside earlier in the week.
December WTI Crude Oil settled at $51.51, down $0.75 or -1.44% and January Brent Crude Oil finished the session at $56.98, down $0.82 or -1.42%.
Prices were also pressured by larger-than-expected product inventories in this week’s U.S. Energy Information Administration’s report.
Ongoing tension in the Middle East boosted prices earlier in the week because of the threat of supply disruptions, however, Thursday’s price action indicates that those concerns may now be priced into the market.
Forecast
Thursday’s price action sent a message to investors that the hedge funds and money managers are not likely to bite on short-term speculative events, but would rather play the long-side when they become confident that the oil markets are balancing.
Early Friday, the markets are edging up slightly, supported by signs of tightening supply and demand fundamentals. However, capping gains is a warning about excessive China optimism.
After posting four-straight days of gains, crude oil investors were enticed into selling on Thursday after outgoing governor of China’s central bank warned of a “Minsky moment”, a reference to excessive optimism about economic growth fueled by vast debt and speculative investment.
There are signs that crude oil prices could pick up strength over the long-run, but bullish investors would rather wait for the announcement that OPEC and its major producing partners will extend production cuts through the end of 2018. Until this occurs, we’re likely to see a rangebound trade.
This article was originally posted on FX Empire
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