Oil Fundamental Forecast – September 9, 2016

Crude Oil added 76 cents ahead of the delayed weekly inventory report due in a few hours. Oil is trading at 43.26 while Brent Oil added 64 cents to 48.62. Crude oil started this week on a positive note amid the agreement between Russia and Saudi Arabia to stabilize crude oil prices. However, ­­­­the momentum slowed on Tuesday, September 6, due to the lack of information on the output freeze talks.

Crude oil prices moved higher on Wednesday, September 7, amid increasing speculation over the output freeze talks. Bijan Zanganeh, the oil minister of Iran, commented on September 6 in a meeting with Mohammed Barkindo, the secretary general of OPEC, that he would support measures to stabilize oil prices at $50–$60 per barrel. This improved crude oil’s sentiment and supported oil prices.

The market awaits the producers and consumers meeting scheduled for September 26–28 in Algeria amid increasing speculation over output freeze talks. On the other hand, the market is also looking forward to the crude oil inventory data by the American Petroleum Institute (or API), which is scheduled to be released on September 7.

“Whether such a threat, which has been proven so often to be empty in the past, will be enough to scare off speculative short selling remains to be seen.” Iran has said it would cooperate on a freeze only if fellow exporters recognized its right to boost market share to levels reached before the imposition of nuclear-related sanctions, which have now been lifted.

Analysts at Citi warned Iranian involvement would be a key hurdle for an OPEC decision and added it was unlikely that any viable agreement would impact physical market balances. In the short term, dollar weakness following soft US economic data could support oil as non-US investors take advantage of a relatively cheaper currency to buy dollar-denominated assets. Traders said US crude was supported by Genscape data showing a draw of some 700,000 barrels last week at the Cushing, Oklahoma delivery hub for US crude futures.

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Upcoming Economic Events that you should be monitoring:

 September 9, 2016

Government Bond Auctions

Date Time Country Auction

Sep 08 11:00 Ireland Holds bond auction

Sep 08 17:20 Italy Announces details of bond auction