Oil Fundamental Forecast – May 12, 2016

June crude oil futures rebounded from earlier weakness to trade $44.84, up $0.18 or 0.40%, shortly before the regular session opening. Pressuring the market earlier were concerns over Canadian oil sand production which was expected to gradually ramp up following forced closures due to wildfires, and record U.S. crude stocks.

An ongoing battle by Middle East producers for market share in Asia also weighed on prices, countering production declines and disruptions around the world.

International Brent crude oil futures were trading at $45.99 per barrel, up 47 cents since their last settlement.

Traders said that prices are likely going to be capped today as concerns over further disruptions in Canada eased as producers looked to return to their operations. Traders also reported that oil sands companies around the Canadian energy hub of Fort McMurray began to restart operations on Tuesday after an out-of-control wildfire forced as week-long shutdown.

With Canadian oil sand production gradually coming back and U.S. crude inventories hitting record highs, traders are now saying that the current rally may begin to fizzle out.

Industry group American Petroleum Institute (API) said on Tuesday that U.S. crude inventories rose by 3.45 million barrels to a record 543.1 million barrels during the week ended May 6. Traders were looking for a 0.300M barrel increase. API Weekly Cushing Crude Oil Stock rose 1.460M, up from last week’s 0.382M gain.

Traders expect today’s U.S. Energy Information Administration’s weekly inventory report to show an increase of 0.1 million barrels.

In other potentially bearish news, Iran has set its June official selling prices for heavier crude grades it sells to Asia at the biggest discounts to Saudi and Iraqi oil since 2007-2008. Iran on Tuesday set the June OSP for Iranian Heavy crude at $1.60 a barrel below the Oman/Dubai average in the latest sign that producers especially in the Middle East are willing to accept low prices in return for market share.

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, May 12, 2016

Government Bond Auctions

Date Time       Country           Auction

May 11 11:03 Sweden Holds bond auction

May 11 11:30 Germany Eur 5bn Jun 2018 Schatz

May 12 11:10 Italy Holds bond auction

May 12 17:20 Sweden Details of I/L auction on May 19

May 12 N/A Ireland Holds bond auction