Oil Price Fundamental Daily Forecast – Will U.S. Announce Iran Strategy Ahead of Schedule?
U.S. West Texas Intermediate and international-benchmark Brent crude oil posted a reversal to the upside late Wednesday to finish higher for the session. Early in the trading day, prices were driven lower by a U.S. government report that showed an unexpected increase in U.S. crude oil and gasoline inventories.
June WTI crude oil settled at $68.05, up $0.35 or +0.52% and June Brent crude oil closed at $74.00, up $0.14 or +0.19%.
According to the U.S. Energy Information Administration (EIA), crude inventories rose 2.2 million barrels in the week to April 20, compared with expectations for a decrease of 1.6 million barrels. Gasoline stocks grew by 840,000 barrels, versus forecasts for a 625,000-barrel drop.
Net U.S. crude imports fell last week by 43,000 barrels per day as exports rose nearly 600,000 bpd to a record 2.3 million bpd, according to the EIA data.
Additionally, combined exports of crude and petroleum products hit a weekly record at 8.3 million bpd, of which more than 6 million bpd was from products like gasoline and diesel fuel. Exports of distillate inventories have been strong of late, draining inventories on the East Coast, a traditional parking spot for distillates like jet fuel.
Crude stocks at Cushing, Oklahoma, delivery hub for U.S. crude futures rose by 459,000 barrels, the EIA said.
Refinery runs fell by 328,000 bpd and utilization rates fell by 1.6 percentage points to 90.8 percent of total capacity, EIA data showed.
Distillate stockpiles, which include diesel and heating oil, fell by 2.6 million barrels, versus expectations for an 861,000-barrel drop, the EIA data showed.
Overall U.S. crude production continued to grow, rising last week to 10.59 million bpd.
Forecast
Crude oil prices continued to strengthen early Thursday in response to yesterday’s rebound rally. However, gains are being capped by rising U.S. inventories and production.
At 0648 GMT, June WTI crude oil is trading $68.22, up $0.17 or +0.24% and June Brent crude oil is at $74.33, up $0.33 or +0.45%.
We could be looking at a mixed trade today in reaction to yesterday’s EIA report. Pressuring the market is the rise in gasoline inventories which rose due to an extraordinary high level of imports and that is weighing on crude oil prices. However, tempering the news a little is the record exports of crude oil and distillate fuel last week.
Prices could drop sharply if the U.S. announces an agreement on an Iran strategy. However, due to strong bullish interest from the hedge funds, any substantial sell-off is likely to be bought.
This article was originally posted on FX Empire
