Oil Price Fundamental Daily Forecast – Bearish IEA Report Weighing on Prices

U.S. West Texas Intermediate and international benchmark Brent crude oil futures are trading mixed early Monday after giving up its earlier gains. The price action is being primarily driven by the movement in the U.S. Dollar and the pre-market trade in the U.S. equity markets.

At 1316 GMT, April WTI crude oil is trading $61.20, down $0.05 or -0.08% and May Brent crude oil futures are at $64.24, down $0.13 or -0.20%.

Oil prices were strong early in the session, but gains were capped by a report that predicted a major spike in U.S. oil output in the next five years.

The International Energy Agency (IEA) early Monday revised U.S. oil output growth up sharply, saying the country would be producing a total of nearly 17 million barrels per day in 2023, up from 13.2 million last year, eating into OPEC’s market share and moving closer to self-sufficiency.

The IEA also said it expected oil demand growth to average a fairly robust 1.1 percent a year to 2023 and said OPEC would fail to significantly increase its production capacity.

Forecast

The underlying news is bearish for prices, but traders are also paying attention to the movement in the U.S. Dollar, given its current volatility due to rising interest rates and fears of retaliation because of the proposed tariffs on steel and aluminum and the threat of additional tariffs.

The tone of the WTI market is likely to be determined by trader reaction to a major pivot on the daily chart at $61.20. This price is controlling the direction of the futures contract.

The direction of the Brent contract will be determined by trader reaction to the pivot at $64.61.

The most bullish scenario for crude oil will be a weaker U.S. Dollar and firmer stock prices. A bearish tone could develop if the dollar strengthens and stock prices weaken.