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
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.
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WEEKLY
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 |
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
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.