Oil Price Fundamental Daily Forecast – Bullish Tone as Positive Chinese Factory Data Lifts Sentiment

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Monday, adding to their first quarter gains when the markets posted their best performances in nearly ten years. Traders are saying that concerns over supplies continue to offset fears of a slowing glowing economy.

U.S. sanctions on exports from Iran and Venezuela combined with supply cuts by members of OPEC and its allies including Russia have been providing support since January 1 by trimming global supply. The highly successful output cuts have been underpinning the markets and preventing any major sell-offs, but the rally has been a grind because of concerns about global growth and the U.S.-China trade dispute.

At 09:38, May WTI crude oil is at $60.63, up $0.49 or +0.83% and June Brent crude oil is at $68.50, up $0.92 or +1.36%. Both markets hit new highs for the year earlier today.

In Other News

On Friday, the U.S. Energy Information Administration reported that domestic output from the world’s top crude producer edged lower in January to 11.0 million bpd.

Additionally, according to Baker Hughes, U.S. energy firms last week reduced the number of oil rigs operating to the lowest level in nearly a year, cutting the most rigs in a quarter in three years. This trend has lifted fears that U.S. production was keeping a lid on prices.

Supplies could get even tighter as U.S. officials step up the sanctions against Iran. Sigal Mandelker, U.S. under-secretary of the Treasury for Terrorism and Financial Intelligence, told reporters in Friday that the United States had placed further “intense pressure” on Iran. The U.S. also instructed oil trading houses and refiners to further cut dealings with Venezuela or face sanctions themselves.

Daily Forecast

U.S. West Texas and international-benchmark Brent crude oil prices are likely to continue to be supported throughout the session on Monday due to positive Chinese manufacturing PMI data released over the week-end. The news is providing a relief for traders who feared a potential global recession later this year and lower demand.

Furthermore, investors are expressing optimism that the on-going trade talks between the United States and China would soon lead to a trade deal.

Finally, prices are also likely to continue to be underpinned by bullish money managers and large speculators. According to the latest data from the U.S. Commodity Futures Trading Commission (CFTC), hedge funds and other money managers raised their net long U.S. crude futures and options positions to 243,209 in the week to March 26.