Oil Price Fundamental Daily Forecast – All Eyes on EIA Gasoline Inventory Data

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are inching higher in a very slow trade on Wednesday amid concerns the current surge in COVID-19 cases globally would lead to a second round of demand destruction. Gains are also being capped ahead of the release of a key government inventories report and on lower demand for risky assets.

At 12:50 GMT, August WTI crude oil is trading $40.72, up $0.08 or -0.17% and September Brent crude oil is at $43.22, up $0.14 or +0.37%.

Prices were pressured on Tuesday following the release of a bearish private industry inventories report. Later today at 14:30 GMT, traders will get the opportunity to respond to the latest inventory data from the U.S. Energy Information Administration.

American Petroleum Institute Weekly Inventories Report

The API estimated on Tuesday a build in crude oil inventories of 2.048 million barrels for the week-ending July 3. Analysts were looking for a 3.114 million barrel draw.

The API also reported a draw of 1.825 million barrels of gasoline for the week-ending July 3, compared to last week’s 2.459-barrel draw. Yesterday’s data compares to analyst expectations for a smaller 2,000-barrel draw for the week.

Distillate inventories were down by 847,000 barrels for the week, compared to last week’s 2.638-million barrel build, while Cushing inventories saw a build of 2.219 million barrels.

Daily Forecast

The reason crude oil prices aren’t trading sharply lower on Wednesday is probably because there was a drawdown in gasoline and distillate stocks. A build in these two fuels would’ve indicated the re-closing of certain sections of the country was already taking its toll on the fuel demand.

We’re not out of the woods yet. Today’s EIA fuels report could have a dramatic bearish influence on prices if there is an unexpected build. Traders are looking for a drawdown in crude oil of 3.2 million barrels.

Traders should also start preparing for Thursday’s Weekly Initial Claims report. A surge in claims could drive prices lower especially after three Fed policymakers expressed concern that the surge in infections threatens to pinch consumer spending and job gains just as some stimulus programs are set to expire.

In other news, key ministers in the OPEC+ grouping of oil exporters are due to hold talks next week about the future of their record output cut deal which is due to taper off from next month.

This could only lead to rumor and heightened volatility over the short-term.