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Oil Fundamental Forecast – May 3, 2016

By:
Barry Norman
Published: May 2, 2016, 11:55 UTC

Crude Oil dipped 31 cents as traders booked profits after seeing close to a 20% gain in April and a huge surge at the end of last week. WTI oil is trading

Oil Fundamental Forecast – May 3, 2016

Crude Oil dipped 31 cents as traders booked profits after seeing close to a 20% gain in April and a huge surge at the end of last week. WTI oil is trading at 46.88 and Brent Oil us at 46.88. Oil near or above $50 a barrel could make drilling attractive again for USA shale producers, which would add to the glut and pressuring prices.

From mid-2014 crude plunged more than 70 per cent to near 13-year lows at the start of the year owing to a supply glut, overproduction, weak demand and a slowdown in the global economy.

According to Fortune, Brent and WTI benchmarks rose more than 4% after the American Petroleum Institute (“API”) reported a drawdown of almost 1.1 million barrels in US crude inventories last week.

EIA also reported US crude production continued to retreat.

Oil prices continued to rally as the U.S. dollar depreciated against other currencies, making the dollar-priced crude less expensive and more attractive for buyers holding other currencies. “Saudi imports haven’t been at this level since April 2015”, said Matt Smith of crude cargo trackers Clipperdata, which noted inflows above 1.2 million barrels of Saudi crude in the United States last month. That tends to stimulate demand and push oil prices higher.

US crude futures have rebounded more than 70% from February’s 12-year lows near $26 a barrel, as investors rallied behind the prospect of a global production freeze headed by Saudi Arabia and Russia. Those hopes were dashed in a meeting of major producers on April 17, where Saudi Arabia vowed not to freeze production without participation from regional rival and fellow OPEC member Iran.

Saudi Arabia, which produces more than 10 million barrels of oil per day, is the de facto leader of the 13-member Organization of the Petroleum Exporting Countries. Riyadh’s hardline approach against Iran suggests geopolitics is beginning to factor into the kingdom’s oil policy.

The OPEC survey aside, Saudi oil output was expected to edge up by 350,000 barrels to around 10.5 million barrels per day, sources told Reuters, as tankers filled with unsold oil floated at sea seeking buyers. With the futures testing the $45 a barrel price level, a breakthrough could lead to further strength in crude oil prices.

The Federal Reserve will conclude a much-anticipated policy meeting later Wednesday, which will be closely followed for clues about the state of the USA economy and the bank’s timetable for hiking interest rates.

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  
      China – Labor Day
      United Kingdom – Early May Bank Holiday
  EUR   Manufacturing PMI (Apr)  51.7 51.5 51.5  
  USD   Manufacturing PMI (Apr)     50.8  
  USD   ISM Manufacturing Employment     48.1  
  USD   ISM Manufacturing PMI (Apr)   51.5 51.8

 

crude oil

Upcoming Economic Events that you should be monitoring:

Tuesday, May 3, 2016

Cur. Event Actual Forecast Previous  
  Japan – Constitution Day
  AUD Building Approvals (MoM) (Mar)   -3.0% 3.1%  
  CNY Caixin Manufacturing PMI (Apr)   49.9 49.7  
  AUD Interest Rate Decision (May)   2.00% 2.00%  
  GBP Manufacturing PMI (Apr)   51.2 51.0

Government Bond Auctions

Date Time       Country           Auction

Mar 02 13:00 Norway Details of bond auction on Mar 04

May 04 11:05 Norway Holds bond auction

May 04 11:30 Germany Eur 4bn Apr 2021 Bobl

May 04 11:50 France Holds bond auction

May 04 17:20 Sweden Details of bond auction on May 11

May 05 10:30 Spain Holds bond auction

May 05 11:00 Austria Holds bond auction

 

 

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