Oil Fundamental Analysis – December 17, 2015 -Forecast

Analysis and Recommendations:

Crude Oil reversed early gains to end up in the red trading at 37.02 down by 33 cents while Brent Oil tumbled 99 cents to 37.74 as oils converged on each other. This is signaling serious market disarray.  “The focus this week is the Fed’s decision. If the expectation of a rate hike is realized, it will show the U.S. economy is doing well. But given the bearish outlook on the global economy, it could be an isolated case,” said Vane Lai, an energy analyst at National Australia Bank.

Expectations that the U.S. Congress will lift a 40-year ban on U.S. crude oil exports in the near term is also weighing heavily on prices. While abolishing the ban bodes well for U.S. shale producers, an increase in oil supply in the global market will likely exacerbate weakness in the already inundated market, analysts say.

“If the U.S. Congress lifts the ban on U.S. crude exports, it will weigh on Brent prices but allows U.S. crude to gain new turf,” said an Australia-based energy analyst.

According to the API estimate, U.S. crude stockpiles likely grew by 2.3 million barrels for the week ended Dec. 11. The official data by the Energy Information Administration will be issued on Wednesday.

Global energy markets are still holding out for a much bigger contraction in oil supplies before the oil price rallies, but the ongoing low-oil-price environment will likely put further pressure on this process. With the price of West Texas Intermediate (WTI) testing six-year lows, the rate at which energy companies are rushing to cut spending and cancel drilling projects will increase, eventually bringing about the much-needed market correction.

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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This Week in Petroleum
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Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Thursday, December 17, 2015

Government Bond Auctions

Date Time Country

Dec 15 11:15 Austria Holds RAGB bond sale

Dec 17 10:30 Spain Auctions Bonos/Obligaciones

Dec 17 11:30 UK GBP 0.7bn 1.25% Nov 2032 I/L Gilt

Dec 17 19:00 US USD 16bn 5-year TIPS auction

Dec 23 17:30 Italy Announces details of CTZ on 29 Dec, plus BTP/CCTeus on 30 Dec

Dec 23 US Holds 2-year FRN auction

 

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