Oil Price Fundamental Daily Forecast – Bearish Pressure Continues to Build

U.S. West Texas Intermediate and international-benchmark crude oil futures are trading lower on Friday for a sixth consecutive session. The catalyst behind the selling pressure is Iran’s plan to boost production and record U.S. crude output. Both factors are likely to drive up global supplies.

At 0900 GMT, March WTI crude oil futures are trading $60.58, down $0.57 or -0.93% and April Brent futures are at $64.35, down $0.46 or -0.71%.

OPEC member Iran on Thursday announced plans to increase production within the next four years by at least 700,000 barrels a day.

On Wednesday, the U.S. Energy Information Administration (EIA) said crude production last week rose to a record high of 10.25 million barrels per day (bpd).

Forecast

In addition to the bearish news about increased Iran production and rising U.S. output, traders should also watch the movement in the U.S. Dollar and equities markets today. A rising dollar will pressure the dollar-denominated commodity because it tends to decrease foreign demand. Turbulence in the stock market could encourage to book profits and liquidate long positions.

The situation in crude oil could turn ugly if the hedge fund and commodity fund money managers start to dump their long positions. This is because money managers currently own more than one billion barrels of crude oil.

March WTI futures are currently sitting inside a retracement zone, bounded by $61.37 on the upside and $60.12 on the downside.

A sustained move through $60.12 will indicate the selling is getting stronger. This could drive prices to $58.50 today. Overcoming $61.37 will indicate short-covering or position-squaring ahead of the week-end.

April Brent crude oil is trading on the bearish side of its retracement zone. This is helping to generate a downside bias. A move back above $64.91 will indicate short-covering or position-squaring ahead of the week-end.

Pressure could continue today if the dollar rises and the stock market continues to sell-off.