Oil Price Fundamental Daily Forecast – API Data Shows Unexpected Draw, EIA Traders Looking for Build
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures settled higher on Tuesday after the American Petroleum Institute reported a surprise crude oil draw. The market also continues to be supported by geopolitical tensions over the disappearance of a prominent Saudi journalist. Some are saying if the Saudi’s are pushed too hard on the issue, they may retaliate by pulling supply from the market.
At 0813 GMT, December WTI crude oil is trading $71.98, up $0.22 or +0.28%. January Brent crude oil is at $81.30, up $0.26 or +0.32%.
API Report
According to the API, U.S. crude inventories fell by 2.13 million barrels during the week-ending October 12. Analysts were looking for an inventory build of 2.167 million barrels.
The API also reported a 3.4 million barrel draw in gasoline inventories for the week-ending October 12. Analysts had forecast a draw of 1.074 million barrels.
Distillate inventories were down during the same period by 246,000 barrels, compared to a larger expected draw of 1.280 million barrels.
Inventories at the Cushing, Oklahoma, futures hub increased by 1.5 million barrels.
Forecast
The direction of the crude oil markets on Wednesday is likely to be determined by trader reaction to the U.S. Energy Information Administration’s weekly inventories report, due to be released at 1430 GMT. The report is forecast to show a build of 1.6 million barrels during the week-ending October 12. However, the estimate may change ahead of the report due to the surprise API inventories number.
In other news, according to CNBC, U.S. President Trump gave Saudi Arabia the benefit of the doubt in the disappearance of journalist Jamal Khashoggi even as U.S. lawmakers pointed the finger at the Saudi leadership and Western pressure mounted on Riyadh to provide answers.
This is important because according to rumors, Saudi Arabia could cut as much as 500,000 barrels per day of crude production in response to any U.S. sanctions. If this were to occur, prices could rise $10 to $20 over the near-term.
Supporting the market are reports that Iranian crude exports are falling faster than anticipated ahead of the start of the November 4 sanctions. Perhaps in response to this news, OPEC Secretary-General Mohammad Barkindo urged oil producing companies to increase capacities and invest more to meet future demand as spare oil capacity shrinks worldwide.
Helping to keep a lid on prices early is a report on one of Russia’s top energy companies, Gazprom Neft. The company apparently is no longer capping oil output increases by local producers.
This article was originally posted on FX Empire
