Oil Price Fundamental Daily Forecast – API Data Expected to Show U.S. Crude Inventories Fell

U.S. West Texas Intermediate and international-benchmark Brent crude oil are trading slightly higher on Tuesday after posting a mixed performance earlier in the session. The price action, which has been bordering on rangebound the last three sessions, suggests investor indecision in response to the announcement of new tariffs by the United States last week, and yesterday’s retaliation by China.

At 09:53 GMT, September WTI crude oil is trading $55.01, up $0.32 or +0.60% and October Brent crude oil is at $60.06, up $0.25 or +0.42%.

Traders are attributing short-covering and profit-taking to the early strength on Tuesday, but gains are being capped by the escalating trade dispute between the United States and China.

A rebound in demand for riskier assets on Tuesday, after China supported its currency, could be another reason underpinning crude oil prices. Furthermore, we could be looking at position-squaring ahead of Tuesday afternoon’s U.S. American Petroleum Institute weekly inventories report and Wednesday’s U.S. Energy Information Administration weekly inventories data.

In other news, Iran on Monday said it will no longer tolerate “maritime offences” in the Strait of Hormuz, a day after it seized a second oil tanker near the strategic waterway that it accused of smuggling fuel. The move temporarily raised concerns about potential supply disruptions.

Daily Forecast

The key focus for traders continues to be the volatility in the financial markets caused by the heightened tensions between the U.S. and China. So the tensions in the Middle East could take a backseat on Tuesday.

However, the tensions could move to the forefront if U.S. equity markets can hold on to their earlier gains in response to China’s support of its Yuan. This could underpin oil prices.

We’re expecting to see a strong reaction at 20:30 GMT when the API releases its weekly storage report. It is forecast to show U.S. crude oil inventories fell for an eighth consecutive week.