Oil Price Fundamental Daily Forecast – Another Weekly Draw Propping Up Prices, While Demand Concerns Linger

U.S.  West Texas Intermediate and international-benchmark Brent crude oil futures are edging lower on Thursday while posting a narrow trading range for the 11^th straight session. The market is likely being propped up by consecutive weekly inventory drawdowns, but gains are being limited by demand concerns in the wake of the Fed’s gloomy outlook for the economy.

At 11:11 GMT, October WTI crude oil is trading $42.68, down $0.43 or -1.00% and December Brent crude oil is at $45.86, down $0.50 or -1.08%.

Meanwhile, major producers warned of a risk to demand recovery if the coronavirus crisis is prolonged.

US Energy Information Administration Weekly Inventories Report

U.S. crude oil stockpiles fell last week even as net imports jumped sharply, while fuel demand dipped as well, the EIA said on Wednesday.

Crude inventories fell by 1.6 million barrels in the week to August 14 to 512.5 million barrels, less than analysts’ expectations in a Reuters poll for a 2.7 million-barrel drop.

Net U.S. crude imports rose by 1.1 million barrels per day to 3.6 million bpd, the EIA said.

Fuel demand dropped by more than 2 million bpd to 17.2 million bpd in terms of product supplied. Overall fuel demand is down 14% from the year-ago period over the last four weeks.

Refinery runs fell by 171,000 bpd in the last week, the EIA said, while refinery utilization rates fell by 0.1 percentage points.

U.S. gasoline stocks fell by 3.3 million barrels to 243.8 million barrels, the EIA said, compared with analysts’ expectations for a 1.1 million-barrel drop.

Distillate stockpiles, which include diesel and heating oil, rose by 152,000 barrels, versus expectations for a 557,000-barrel drop. Overall distillate stockpiles sit at 177.8 million barrels, just off a 38-year high set last month.

Daily Forecast

It’s hard to get bullish with the Fed weighing in on the economy with another dire warning. The Fed minutes, released on Wednesday, sounded pretty gloomy about the U.S. economy.

Officials at the meeting “agreed that the ongoing public health crisis would weigh heavily on economic activity, employment, and inflation in the near term and was posing considerable risks to the economic outlook over the medium term,” the meeting summary said.

Meanwhile, although Saudi Energy Minister Prince Abdulaziz bin Salman said global oil demand should recover to pre-pandemic levels as soon as the fourth quarter as long as OPEC+ partners continue to comply with a deal to cut output, Reuters said that a second draft of the statement showed a second extended wave of the pandemic posed a major risk for the oil market recovery.