Oil Price Fundamental Daily Forecast – Bearish API Data, Brexit, Trade Deal Uncertainty Weighing on Prices

Prices are likely to remain under pressure on Thursday if today’s U.S. Energy Information Administration (EIA) report confirms the bearish numbers in the API report, released late Tuesday. Traders are looking for a 2.8 million barrel build. If confirmed, the market is going to have a hard time rallying unless there is a surprise Brexit announcement, or further official upbeat comments over U.S.-China trade relations.
James Hyerczyk
Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading slightly lower on Thursday and in an extremely tight range amid low volume as traders await the outcome of Brexit negotiations and the release of the latest weekly government inventories data.

The lack of clarity over a partial U.S.-China trade deal is also keeping a lid on prices as well as well as a larger-than-expected build-up in stocks in the United States according to an industry survey. Comments from a high ranking government official on a U.S.-China trade deal are also helping to underpin prices.

At 08:14 GMT, December WTI crude oil futures are trading $53.12, down $0.33 or -0.62% and December Brent crude oil is at $59.15, down $0.27 or -0.45%.

Brexit Outcome Worries

WTI and Brent crude oil prices may be treading water over Brexit concerns as Britain and the European Union scramble to secure a last-minute Brexit deal. Traders are saying that anything that isn’t a hard Brexit is likely to be positive for crude oil prices.

American Petroleum Institute Weekly Inventories Report

Late Wednesday, one day later than usual, the API reported a major crude oil inventory build of 10.45 million barrels for the week-ending October 10. Traders were looking for a much smaller 2.878-million-barrel build.

After Wednesday’s data release, the net draw for the year is 15.27 million barrels for the 42-week reporting period so far, using API data.

The API also reported a draw of 934,000 barrels of gasoline for the week-ending October 10. Analysts had predicted a larger draw in gasoline inventories of 1.381 million barrels for the week. Distillate inventories fell by 2.862 million barrels for the week, while inventories at the Cushing, Oklahoma futures hub, rose by 1.648 million barrels.

U.S.-China Trade Relations

Although a general lack of clarity over the partial trade deal between the United States and China on Friday has been weighing on prices all week, traders were a little more upbeat early Thursday after U.S. Treasury Secretary Steven Mnuchin said U.S. and Chinese trade negotiators are working on nailing down a Phase 1 trade deal text for their presidents to sign next month.

Daily Forecast

There are some who believe the market has reached a balance point in terms of price because crude oil has been holding above its multi-month low reached in early August. They are calling the chart pattern constructive.

However, prices are likely to remain under pressure on Thursday if today’s U.S. Energy Information Administration (EIA) report confirms the bearish numbers in the API report, released late Tuesday. Traders are looking for a 2.8 million barrel build, however, this estimate may rise ahead of its release at 14:30 GMT. If confirmed, the market is going to have a hard time rallying unless there is a surprise Brexit announcement, or further official upbeat comments over U.S.-China trade relations.

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