Oil Price Fundamental Daily Forecast – Expecting Sideways Trade after Hitting High Overnight

International-benchmark Brent crude oil and U.S.  West Texas Intermediate crude oil futures finished higher on Thursday. Volume remains well-below average. Traders showed limited response to yesterday’s U.S. Energy Information Administration’s (EIA) weekly inventories report.

According to the EIA, U.S. crude stocks fell last week as refineries hiked output, while gasoline and distillate inventories rose. Crude inventories fell by 4.6 million barrels as refineries hiked output in the week to December 22, compared with analyst expectations for a decrease of 4.0 million barrels.

Overnight, crude oil prices reached their highest since mid-2015. The early strength is being pinned on unexpected weakness in American output and a fall in commercial crude inventories. Brent crude oil in particular is being supported by ongoing supply cuts by top producers OPEC and Russia as well as strong demand from China.

Besides the weekly drawdown, the EIA also said that U.S. oil production dipped to 9.754 million barrels per day, down from 9.789 million bpd the previous week.

Prices also continue to be helped by pipeline outages in Libya and the North Sea, although both issues could be resolved early next year.