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Oil Price Fundamental Daily Forecast – API Report Shows Surprise Build, EIA Report Expected to Show Draw

Barring any unforeseen news, traders are likely to respond to today’s U.S. Energy Information Administration’s weekly inventories report, due to be released at 1430 GMT. It is expected to show a draw of 3.4 million barrels. However, due to the surprise build in the API report, this EIA report is a toss-up. Because of this, we could see heightened volatility levels upon its release.
James Hyerczyk
Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower shortly before the regular session opening on Wednesday. The market is being pressured by a bearish private industry inventories report released late Tuesday. Traders are also selling the markets ahead of today’s U.S. Energy Information Administration’s (EIA) weekly inventories report which could produce similar bearish numbers.

At 0822 GMT, September WTI crude oil is at $66.57, down $0.59 or -0.88% and September Brent crude oil futures are trading $71.34, down $0.82 or -1.14%.

For most of the session on Tuesday, prices were steady and the futures markets closed marginally higher after sellers failed to drive prices lower with conviction. Helping to prop up prices were the on-going supply disruptions in Venezuela and renewed supply problems in Libya.

Late in the session, the American Petroleum Institute (API) reported a surprise crude oil build of 629,000 barrels of United States crude oil inventories for the week-ending July 14 compared to analyst expectations that this week would see a draw in crude oil inventories of about 3.622 million barrels.

The API also reported a build in gasoline inventories for the week-ending July 14 in the amount of 425,000, versus an estimate for a draw of 44,000 barrels.

Distillate inventories were also up this week by 1.71 million barrels, compared to a smaller expected build of 873,000 barrels. Finally, inventories at the Cushing, Oklahoma futures hub fell by 1.34 million barrels.


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Forecast

Barring any unforeseen news, traders are likely to respond to today’s U.S. Energy Information Administration’s weekly inventories report, due to be released at 1430 GMT. It is expected to show a draw of 3.4 million barrels. However, due to the surprise build in the API report, this EIA report is a toss-up. Because of this, we could see heightened volatility levels upon its release.

Both the WTI and Brent futures contracts are in positions to take out important technical levels. With bearish supply issues building, taking out these support levels could trigger an acceleration to the downside.

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