U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading mixed on Wednesday shortly before the regular session opening. Both markets are being pressured by an unexpected increase in U.S. supply according to an industry report. However, they are also being underpinned by expectations of production cuts from OPEC and its allies and the surprise output cuts in Canada.
Today’s weakness is actually a continuation of a late session break on Tuesday. That was fueled by a bearish American Petroleum Institute (API) weekly inventories report. The API reported a crude oil inventory build of 5.36 million barrels for the week-ending November 30, compared to analyst expectations of a draw in crude oil inventories of 2.267 million barrels.
Inventories at the Cushing, Oklahoma futures delivery hub climbed by 1.44 million barrels.
The API also reported a build in gasoline inventories for the week-ending November 30 in the amount of 3.61 million barrels. Analysts were looking for a build of 1.333 million barrels in the week. Distillate inventories were up this week by 4.32 million barrels, compared to an expected build of 1.600 million barrels.
Traders won’t have to deal with the U.S. Energy Information Administration today. Its crude oil inventories report has been pushed to Thursday at 1600 GMT in observation of the George H.W. Bush Memorial Service Day on Wednesday.
I expect to see a rangebound trade with bullish traders trying to establish a secondary higher bottom on the charts after the daily trend changed to up on Monday. They are banking on OPEC and Russia to announce production cuts at the cartel’s meeting on December 6. The output cuts could amount to as much as 1.4 million barrels per day.
This article was originally posted on FX Empire
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