Oil Fundamental Forecast – April 14, 2016

Brent and WTI crude oil futures weakened on Wednesday as profit-taking and concern over a larger-than-expected build in U.S. crude stocks trumped a report that Russia and Saudi Arabia had reached consensus on an oil output freeze. Traders are also expressing concern that the meeting in Doha on April 17 will have little impact on the global supply glut and a strengthening dollar.

Nearby Brent futures fell 42 cents to $44.27 a barrel after reaching a four-month high on Tuesday. May WTI crude oil futures were down 60 cents to $41.57 a barrel.

Comments by Saudi oil minister Ali al-Naimi in the al-Hayat newspaper in which he confirmed his country’s position that an outright production cut was out of the question weighed on prices, traders said.

“Forget about this topic,” al-Naimi told the paper, when asked about any possible reduction in his country’s crude output.

A firmer dollar also pressured the dollar-denominated crude oil market, but the biggest influence was the stronger-than-expected inventory build in the American Petroleum Institute’s weekly report.

According to the API, U.S. crude oil stocks rose by a larger than expected 6.2 million barrels to 536.3 million last week. Traders were looking for a 1.9 million barrel increase.

The only bright spot in the report was a drop of 1.93 million barrels at the Cushing, Oklahoma hub. This somewhat offset last week’s 0.620 million barrel build.

On Wednesday, the U.S. Energy Information Administration will release its inventory report for the week-ending April 8. It is expected to show that U.S. crude inventories rose 1.85 million barrels, compared with a 4.937 million barrel decrease from the week before.

Crude oil prices surged on Tuesday after a report surfaced that Russia and Saudi Arabia had reached a consensus about an oil output freeze, ahead of Sunday’s meeting. Investors are now waiting to see if other members of OPEC and Non-OPEC producing countries can reach an agreement at the producer meeting in Doha on April 17.

U.S. crude production is forecast to fall by 560,000 barrels per day to 8.04 million barrels in 2017, while U.S. demand would increase by 190,000 bpd, according to the EIA’s short term energy outlook published on Tuesday.

Global oil demand will grow by 1.16 million barrels per day this year, a 10,000-barrel rise compared with earlier estimates, the EIA said in its monthly forecast.

The agency also raised its oil demand growth estimate for 2017 by 120,000 bpd to 1.33 million bpd.

In other news, China reported that crude imports rose 13.4 percent in the first quarter from a year ago according to China customs data. Imports of oil products fell 1.9 percent in the first quarter.

The negative comment by the Saudi oil minister should be enough to keep the pressure on crude oil today unless the EIA report completely misses the estimate to the good side. His comments cast doubt and doubt usually gives a nervous long an excuse to book profits.

FxEmpire provides in-depth analysis for each asset we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

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Thursday, April 14, 2016

Government Bond Auctions

Date Time       Country           Auction

5% 2025 & Sek 2bn 1% 2026 bonds

Apr 13 11:10 Italy Eur 3-3.5bn 0.1% Apr 2019 BTP

Apr 13 11:15 Switzerland Holds bond auction

Apr 13 11:30 UK Gbp 1.75bn 3.5% 2045 bond

Apr 13 19:00 US $20bn 1.625% Feb 2026 bond

Apr 14 12:00 Ireland Holds bond auction

Apr 14 17:20 Sweden Details of I/L auction on Feb 21

Apr 14 19:00 US $12bn 2.5% Feb 2046 bond

Apr 18 11:00 Belgium Holds OLO auction

Apr 18 13:00 Norway Details of bond auction on Apr 20

Apr 20 11:05 Norway Holds bond auction

Apr 20 11:30 Germany Eur 4bn 0.5% Feb 2026 Bund

Apr 20 17:20 Italy Details of BTPei auction

Apr 20 17:20 Sweden Details of bond auction on Apr 27

Apr 21 10:30 Spain Holds bond auction