Oil Fundamental Forecast – August 25, 2016

Crude oil prices fell on Wednesday as investors reacted to bearish news from the American Petroleum Institute, released late Tuesday. October Crude Oil traded last at $47.16, down $0.94 or -1.95%. Internationally favored Brent Crude Oil was down 64 cents, or 1.2 percent at $49.32, after touching an intraday low of $49.07.

The API data showed a big build during the week-ended August 19, leading to a dramatic shift in investor sentiment and a subsequent sell-off.

Data from the API showed that U.S. crude inventories had risen by 4.5 million barrels last week. Traders were pricing in at 455,000-barrel fall.

Later on Wednesday at 1430 GMT, the U.S. government will release its own weekly crude stocks data. It is expected to show a drawdown of 0.5 to 0.455 million barrels.

Wednesday’s break comes on the heels of a huge rally the previous day, triggered by news that Iran was sending positive signals that the country may support joint OPEC action to prop up oil prices.

The current volatility is being driven by speculation over whether Saudi Arabia and Russia can convince other OPEC and non-OPEC countries to come to an agreement over reducing or perhaps freezing current production levels. Analysts and traders are casting doubts, however, that such an agreement can be pulled off at a meeting in Algeria scheduled for September 26-28 as various OPEC members have their own agendas.

There’s been a lot of talk about a production freeze, but so far nothing substantive has occurred. With the meeting over a month away, there is plenty of time for short-sellers to regain control of the market especially since the supply continues to rise and given the history of trying to unify OPEC and non-OPEC countries in the quest to control production.

There has been a lot of headline printing lately, however, the market may have reached a point where it wants to see action. Crude oil support could erode quickly up into late September once traders realize that it doesn’t make sense to either Iran or Saudi Arabia to put any meaningful constraints on production.

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, August 25, 2016

Government Bond Auctions

Date/Time Country Type

Aug 24 10:03 Sweden Holds bond auction

Aug 24 10:30 Germany Eur 4bn 0% Oct 2021 Bobl

Aug 24 18:00 US Holds 2yr FRN auction & 5yr note auction

Aug 25 18:00 US Holds 7yr note auction

Aug 26 10:10 Italy Holds zero coupon