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Oil Price Fundamental Daily Forecast – Reversing to Upside as Focus Shifts to API Crude, Gasoline Data

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U.S. West Texas Intermediate and Brent crude oil futures are trading higher on Tuesday as traders shrugged off worries about the Colonial Pipeline shutdown while increasing bets it would open sooner than expected.

The markets are also being supported by a report from the Energy Information Administration (EIA) showing that U.S. crude output would decline more than previously forecast in 2021. Later today at 20:30 GMT, traders will get the opportunity to react to the latest inventories data from the American Petroleum Institute (API).

At 17:52 GMT, June WTI crude oil is trading $65.41, up $0.49 or +0.75% and July Brent crude oil is at $68.73, up $0.41 or +0.60%.

Colonial Pipeline Update

Traders are saying crude oil prices reversed to the upside and turned positive on Tuesday on expectations the Colonial Pipeline would be up and running soon. Colonial officials said on Monday they aim to resume full operations by the end of this week.

“It’s quite possible we’ll see reduced crude oil demand. Some refineries in Texas have already scaled back runs because of the pipeline being out, said Lachlan Shaw, National Australia Bank’s head of commodity research.

“That will weigh on crude oil prices pretty obviously, even though parts of the pipeline are restarting and Colonial is expecting the pipeline to be back to capacity by the weekend.”

US Crude Output to Decline More than Previously Forecast in 2021 – EIA

U.S. crude oil production is expected to fall by 290,000 barrels per day (bpd) in 2021 to 11.02 million bpd, the U.S. Energy Information Administration (EIA) said on Tuesday, a steeper decline than its previous forecast for a drop of 270,000 bpd.

The agency also said it expects that gasoline consumption in the United States will average almost 9 million bpd this summer, between April and September, which is 1.2 million bpd more than last summer but almost 600,000 bpd less than summer of 2019.

American Petroleum Institute Weekly Inventories Report

Analysts are expecting data to show U.S. crude inventories fell by about 2.3 million barrels in the week to May 7, following an 8 million-barrel drop the previous session, according to a Reuters poll.

Gasoline stocks are expected to have fallen by about 400,000 barrels, six analysts estimated on average ahead of reports from the API on Tuesday and he EIA on Wednesday.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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