Oil Price Fundamental Daily Forecast – Bullish Traders Hoping OPEC+ Delays Planned Rise in Output in JanuaryU.S. crude oil stockpiles fell sharply last week, while gasoline stocks increased and distillate inventories fell.
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are inching lower on Thursday as investors continued to wait for the result of the U.S. election that could determine the size of the next government stimulus package.
Since the polls closed on Tuesday, Democratic candidate Joe Biden has predicted a win while President Donald Trump sought to fight an expected defeat with lawsuits and demand for a recount.
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Biden Oil Policy
Under a Biden victory, RBC analysts anticipate Iran being able to return around 1 million barrels per day (bpd) of exports back to the market by the second half of 2021. S&P Global Platts analysts do not expect a meaningful return of Iranian oil before 2022 under either Trump or Biden.
COVID-19 Continues to Weigh on Demand
Weakening demand in Europe continued to weigh on sentiment, with average highway use in France, Italy and Spain dropping to its lowest level since late June, ANZ Research said in a note.
“This is likely to put pressure on the OPEC+ alliance to delay its planned rise in output in January,” ANZ Research said.
In breaking news, the number of new daily coronavirus cases recorded in the U.S. surpassed 100,000 for the time Wednesday, according to a tally by Johns Hopkins University.
US Crude Oil Stockpiles Fell Sharply
U.S. crude oil stockpiles fell sharply last week, as a storm cut production in the U.S. Gulf of Mexico, while gasoline stocks increased and distillate inventories fell, the Energy Information Administration said on Wednesday.
Crude inventories fell by 8 million barrels in the week to October 30, compared with analysts’ expectations for an increase of 890,000 barrels. Gasoline stocks rose by 1.5 million barrels, compared with analysts’ expectations in a Reuters poll for a 871,000-barrel drop. Distillate stockpiles, which include diesel and heating oil, fell by 1.6 million barrels, versus expectations for a 2.0 million-barrel draw, the EIA data showed.
Crude production fell 600,000 barrels per day to 10.5 million bpd last week, the EIA said. Stocks at the Cushing, Oklahoma delivery hub for U.S. crude futures rose by 936,000 barrels, the EIA said. Refinery crude runs rose by 164,000 bpd and refinery utilization rates rose by 0.7 percentage points, EIA data showed.
Although the election results are important to the long-term direction of oil prices, we feel the most important factor driving the price action at this time are growing expectations that OPEC and its allies would postpone bringing back 2 million bpd of supply in January given demand has been sapped by new COVID-19 lockdowns.
OPEC+ comments and the volatility of the U.S. Dollar are likely to continue to influence the direction of crude oil prices over the near-term.