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Oil Price Fundamental Daily Forecast – Partial Closure of Keystone Pipeline Propping Up WTI

James Hyerczyk
At this time, there is a lot of uncertainty in the marketplace and this tends to weigh on investor sentiment, but as long as OPEC and its allies continue to stick with their strategy to cut production and trim the global supply, prices should remain supported enough to prevent a steep sell-off.

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Tuesday, recovering from yesterday’s weaker trade. On Monday, the divergence between U.S. oil and Brent crude oil continued with WTI changing its trend to down on the daily chart, while Brent held on to its uptrend.

At 08:49 GMT, March WTI crude oil is trading at $52.73, up $0.32 or +0.63% and April Brent crude oil is at $61.94, up $0.43 or +0.70%.

Crude oil prices continue to find support from the OPEC-led supply cuts and U.S. sanctions against Iran and Venezuela. However, gains are being limited by concerns over surging U.S. production and worries over demand due to slowing economic growth.

Also helping to support prices is the ongoing shutdown of parts of the Keystone pipeline that brings Canadian oil into the United States.

In other news, Bank of America Merrill Lynch said OPEC’s global market share would fall as its outright output drops to 29 million barrels per day (bpd) in 2024 from 31.9 million bpd in 2018.

U.S. bank Morgan Stanley said the surge in U.S. crude oil production, which tends to be light in quality and which rose by more than 2 million barrels per day (bpd) last year to a record 11.9 million bpd, had resulted in overproduction of gasoline.

Bank of America also warned of “a significant slowing in growth globally”, adding that it expected Brent and WTI to average $70 per barrel and $59 per barrel respectively in 2019, and $65 per barrel and $60 per barrel in 2020.

Finally, Suhail Al Mazrouei, the Energy Minister of the United Arab Emirates, said on Monday the oil market should achieve balance in the first quarter of 2019.

Daily Forecast

At this time, there is a lot of uncertainty in the marketplace and this tends to weigh on investor sentiment, but as long as OPEC and its allies continue to stick with their strategy to cut production and trim the global supply, prices should remain supported enough to prevent a steep sell-off.

Trade talks between the United States and China will remain at the forefront throughout the week with the two economic powerhouses scheduled to meet for high-level discussions later in the week. The talks are important because a positive outcome will eventually lead to stronger demand.

Ahead of Tuesday’s American Petroleum Institute’s (API) inventories report later in the session, traders are worried about supply. CNBC reports that traders are bracing for increasing supplies at Cushing, Oklahoma, the delivery point for benchmark U.S. crude futures, as refinery outages could create a supply backlog that will add to inventories that are already at the highest in more than a year.

This article was originally posted on FX Empire

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