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Oil Fundamental Forecast – March 17, 2016

By:
James Hyerczyk
Published: Mar 16, 2016, 12:26 UTC

Analysis and Recommendations: WTI and Brent Crude Oil futures firmed on Wednesday on the news that producers will meet next month in Qatar to discuss a

Oil Fundamental Forecast – March 17, 2016

oil weekly Jim
Analysis and Recommendations:

WTI and Brent Crude Oil futures firmed on Wednesday on the news that producers will meet next month in Qatar to discuss a proposal to freeze output and on growing signs of a decline in U.S. crude production. Previously, the meeting was expected to take place in Russia on March 20.

OPEC and Non-OPEC producers will hold talks in the capital Doha on April 17, Qatari oil minister Mohammed Bin Saleh Al-Sada said. He also said that he expects 15 producers both from and outside OPEC, accounting for about 73 percent of global output to support the initiate.

The latest price readings showed Brent crude futures up 78 cents at $39.52 a barrel. April crude oil futures were trading 79 cents a barrel higher at $37.13.

Traders are also starting to look at financial pressures as being one reason for production to begin falling more quickly over the near-term. On Tuesday, U.S. shale producer Linn Energy said that bankruptcy may be unavoidable as the company missed interest payments amid a slump in oil prices.

Today’s U.S. Energy Information Administration’s weekly inventories report is expected to show a rise of 3.4 million barrels last week. Oil analyst Platts is estimating a 3.1 million barrel decline in gasoline stocks and a 1 million barrel drop in distillate stocks. Refinery utilization if also expected to fall 0.5 percentage points.

Platts also said that an incentive still exists to store crude, which could lead to more barrels flowing into tanks on the Gulf Coast and in Cushing, Oklahoma. This is being seen in the spread between the front-month and second-month contract. However, the spread has narrowed from $2.62/b on February 11 to $1.66/b on Monday.

Gasoline inventories could partially alleviate the crude oil glut if the increasing demand continues. Last week, gasoline supply stood at 250.463 million barrels, down 4.5 million barrels from the previous week. This was the third consecutive week of declines. Stocks, however, still sit about 9.2% above the five-year average for the same time of year.

Traders will also be watching refinery utilization. This week’s report is expected to show a decline to 88.6%. Last week’s reading was 89.1%. Utilization sank as low as 86.1% in early February.

The production freeze meeting news is expected to underpin prices early, but conditions could shift to bearish if the EIA report shows a bigger increase than expected. A lower number will be bullish. Traders are being to look ahead so refinery utilization will carry more weight than usual.

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.

WEEKLY

This Week in Petroleum

Release Schedule: Wednesday @ 1:00 p.m. EST (schedule)

Gasoline and Diesel Fuel Update

Release Schedule: Monday between 4:00 and 5:00 p.m. EST (schedule)

Weekly Petroleum Status Report

Release Schedule: The wpsrsummary.pdf, overview.pdf, and Tables 1-14 in CSV and XLS formats, are released to the Web site after 10:30 a.m. (Eastern Time) on Wednesday.

Today’s economic releases:

Cur. Event Actual Forecast Previous
  USD API Weekly Crude Oil Stock  1.500M 3.400M 4.400M
  NZD Current Account (YoY) (Q4)  -7.71B -7.90B -8.10B
  NZD Current Account (QoQ) (Q4) -2.61B -2.80B -4.75B
  GBP Claimant Count Change (Feb) -18.0K -9.1K -14.8K
  GBP Unemployment Rate (Jan) 5.1% 5.1% 5.1%
  GBP Annual Budget Release      
  USD Building Permits (Feb)   1.200M 1.204M
  USD Core CPI (MoM) (Feb)   0.2% 0.3%
  USD CPI (MoM) (Feb)   -0.2% 0.0%
  USD Housing Starts (Feb)   1.150M 1.099M
  CAD Foreign Securities Purchases (Jan)     -1.41B
  CAD Manufacturing Sales (MoM) (Jan)   0.5% 1.2%
  USD Industrial Production (MoM) (Feb)   -0.3% 0.9%
  USD Crude Oil Inventories     3.880M
  USD FOMC Economic Projections      
  USD Fed Interest Rate Decision   0.50% 0.50%
  USD Fed Chair Yellen Speaks  
  NZD GDP (QoQ) (Q4)    0.6% 0.9%
  AUD Employment Change (Feb)   10.0K -7.9K
30-Minute Brent Crude Oil
30-Minute Brent Crude Oil
30-Minute Crude Oil
30-Minute Crude Oil

Upcoming Economic Events that you should be monitoring:

Thursday, March 17, 2016

Cur. Event Actual Forecast Previous
  JPY BoJ Governor Kuroda Speaks      
  EUR Core CPI (YoY) (Feb)   0.7% 0.7%
  EUR CPI (MoM) (Feb)   0.1% -1.4%
  EUR CPI (YoY) (Feb)   -0.2% -0.2%
  EUR Trade Balance (Jan)   20.2B 24.3B
  GBP BoE MPC vote cut (Mar)   0 0
  GBP BoE MPC vote hike (Mar)   0 0
  GBP BoE MPC vote unchanged (Mar)   9 9
  GBP BoE QE Total (Mar)   375B 375B
  GBP Interest Rate Decision (Mar)   0.50% 0.50%
  GBP BoE MPC Meeting Minutes      
  USD Current Account (Q4)   -118.9B -124.1B
  USD Initial Jobless Claims   268K 259K
  USD Philadelphia Fed Manufacturing Index (Mar)   -1.7 -2.8
  USD Philly Fed Employment (Mar)     -5.0
  CAD Wholesale Sales (MoM) (Jan)   0.2% 2.0%
  USD JOLTs Job Openings (Jan)   5.500M 5.607M
  JPY Monetary Policy Meeting Minutes  

Government Bond Auctions

Date Time and Country

Mar 16 11:03 Sweden Holds bond auction

Mar 16 11:30 Germany Eur 4bn 0.5% Feb 2026 Bund

Mar 17 10:30 Spain Holds bond auction

Mar 17 11:50 France Holds bond auction

Mar 17 19:00 US Holds 10-year TIPS auction

 

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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