Oil Price Fundamental Daily Forecast – API Reports Surprise Inventories Draw, but Traders Focused on EIA Report

A rebound in demand for higher risk assets helped crude oil recover some of the previous session’s losses on Tuesday. Also lending support for U.S. West Texas Intermediate and international-Brent crude oil was Russian Energy Minister Alexander Novak’s comments that a joint organization for cooperation between OPEC and non-OPEC countries may be set up once the current deal on oil output curbs expires at the end of the year.

May WTI crude oil futures settled at $63.51, up $0.50 or +0.79%. June Brent crude oil finished the session at $68.12, up $0.48 or +0.71%.

Forecast

Crude oil prices are under pressure early Wednesday on expectations for a build-up in U.S. crude inventories. However, losses are probably being limited by Russian government comments that may be feeding speculation of an eventual extension of the OPEC-led program to limit supply.

At 0611 GMT, May WTI crude oil is trading $63.26, down $0.26 or -0.38% and June Brent is at $67.82, down $0.30 or -0.44%.

Oil prices were stable on the opening before sellers took control. Buyers initially supported the markets because the American Petroleum Institute (API) reported a surprise draw of 3.28 million barrels of U.S. crude oil inventories for the week-ending March 30, after analysts had anticipated a modest build in crude oil inventories of 246,000.

The API report also showed a build for gasoline for the week-ending March 30 of 1.123 million in gasoline stockpiles. Traders were looking for a draw of 1.26 million barrels.

Distillate inventories saw a surprise build this week of 2.2 million barrels. Analysts had forecast a decline of 1.134 million barrels.

Inventories at the Cushing, Oklahoma futures hub, increased by 4.058 million barrels this week.

The direction of the crude oil market on Wednesday will be determined by the U.S. Energy Information Administration’s inventories report. The EIA report is expected to show a build of 1.4 million barrels.

Prices should rally if the EIA report comes in below expectations. Look for a possible spike to the downside if inventories meet or exceed expectations.