Oil Price Fundamental Daily Forecast – Buckle Up for Volatile US-China Related Price Swings

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower shortly before the regular session opening on Thursday after clawing back most of its earlier losses. Prices fell early in the session as conflicting headlines on U.S.-China trade relations triggered whip-saw price action in the futures markets.

At 10:49 GMT, November WTI crude oil futures are trading $52.53, down $0.06 or -0.11% and December Brent crude oil is trading $58.10, down $0.22 or -0.38%.

In other news, the front-month spread between November and December U.S. crude futures slipped into contango – where futures prices are higher than nearby prices – on Wednesday for the first time in three weeks.

Negative and Positive Headlines Driving Price Action

The wicked two-sided moves the past few sessions in reaction to headlines over U.S.-China trade relations demonstrates how much emphasis the market places on the outcome of the high-level trade talks that are set to begin later today in terms of the global economic outlook.

Crude oil prices plunged from the start on Thursday after the South China Morning Post reported the U.S. and China made no progress on key trade issues in two-days of deputy-level talks, according to sources.

Prices were further pressured by a report that said high-level talks are expected to last for only one day, with Liu He and his team now planning to leave Washington on Thursday.

Prices then rebounded after Bloomberg News and the New York Times reported a possible reprieve on U.S. restrictions on Chinese technology giant Huawei.

U.S. Energy Information Administration Weekly Inventories Report

The EIA reported that U.S. crude supplies climbed for a fourth week in a row, by 2.9 million barrels for the week-ended October 4. Traders were looking for a 2.4 million barrel build.

The EIA data also showed supply declines of 1.2 million barrels for gasoline and 3.9 million barrels for distillates. Traders were looking for gasoline inventory to fall by 1.2 million barrels and distillates inventory to drop by 2.5 million barrels.

Daily Forecast

Crude oil prices could swing back and forth on Thursday if traders decide to react to headlines throughout the session about the progress of the trade talks. If you’re nimble enough then trade the intraday swings, but if you’re worried about getting chopped up in the volatile trade then step aside until the official statements from the United States and China are released.

We may not know how the trade talks went until midnight next Tuesday when the U.S. is set to impose new tariffs on China. If the Trump administration announces a further delay in the tariffs then this would suggest the talks went well and crude oil prices could rally. If the tariffs proceed as planned then look for sharply lower prices.