Oil Fundamental Analysis – week of July 25, 2016 -Forecast

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Published: Jul 23, 2016, 06:33 UTC

Crude Oil closed the week near a recent bottom at 44.23 down 3.75% for the week as production remains high, global inventories are off the charts and the

Oil Fundamental Analysis – week of July 25, 2016 -Forecast

Crude Oil closed the week near a recent bottom at 44.23 down 3.75% for the week as production remains high, global inventories are off the charts and the IMF downgraded growth again reducing longer term demand. Brent oil followed cues from WTI to trade at 45.73. US crude stockpiles continue to decrease, according to the Energy Information Administration. The EIA published its weekly inventory report on Wednesday, and the indicator showed a decline of 2.3 million barrels, a much larger draw-down than the estimate of 1.3 million. Continuing large declines in US stockpiles should push crude prices higher due to stronger demand, but this isn’t occurring, due to a continuing oversupply of crude. Drilling activity in the US is on the upswing, as the number of US drilling rigs continues to increase. This is raising concerns that higher production levels in the US will exacerbate supply levels and push down crude prices. In late June, US crude broke above the $50 level, but has since dropped about 10 percent as it hovers at around $45.

With the “rig-count bottoming” and the market approaching the peak of the summer-driving season, some oil investors are “reticent to be long oil in the near term,” said Justin McNichol’s, chief investment offer at Osborne Partners Capital Management.

Meanwhile, a stronger dollar and ongoing supply-glut fears continued to keep pressure on oil.

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Major Economic Events for the week:

Date	Currency	Name	Volatility	Previous	Consensus
7/27/2016	AUD	Consumer Price Index (YoY)	3	1.3	1.1
7/27/2016	USD	Durable Goods Orders	3	-2.2	-1.1
7/27/2016	USD	Fed’s Monetary Policy Statement	3
7/27/2016	USD	Fed Interest Rate Decision	3	0.5
7/28/2016	JPY	BoJ Press Conference	3
7/29/2016	JPY	BoJ Interest Rate Decision	3	-0.1	-0.2
7/29/2016	JPY	BoJ Monetary Policy Statement	3
7/29/2016	EUR	Gross Domestic Product (YoY)	3	1.7	1.6
7/29/2016	EUR	Gross Domestic Product (QoQ)	3	0.6	0.3
7/29/2016	EUR	Consumer Price Index (YoY)	3	0.1
7/29/2016	EUR	Consumer Price Index – Core	3	0.9