Oil Price Fundamental Daily Forecast – Bullish Traders Looking at Iran Sanctions, Bearish Traders Focusing on Trade Disputes

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading slightly higher early Friday as the markets attempt to recover from yesterday’s steep sell-off. The U.S. futures contract is getting some technical help after testing a key retracement zone on the daily chart. The Brent contract came close, but did not complete a full 50% to 61.8% retracement of the last rally.

At 0744 GMT, October WTI Crude Oil is trading $67.90, up $0.14 or +0.13%. December Brent crude oil is at $76.22, up $0.07 or +0.09%.

On Thursday, the markets were driven lower by a two-sided government inventories report. The U.S. Energy Information Administration (EIA) reported that U.S. commercial crude oil inventories fell by 4.3 million barrels to 401.49 million barrels in the week to August 31, the lowest since February 2015. This was the bullish news.

The bearish news, which drove prices sharply lower, was a 1.8 million barrel rise in gasoline stocks. Distillate stockpiles also contributed to the losses with a 3.1 million barrel increase during the week-ending August 31.

The EIA also said U.S. crude oil production last week remained at a record 11 million barrels per day (bpd), a level it has largely been at since July.

Forecast

The price action suggests WTI and Brent may have hit the balance point traders were looking for on Thursday.

With the inventories report out of the way, investors may shift their focus back to supply issues pertaining to the Iran sanctions. Bearish traders will be thinking about lower future demand if the Trump administration announces new tariffs on China.

For October WTI crude oil, look for a bullish tone to develop on a sustained move over $67.65. The market will weaken under this level, however, don’t expect an acceleration to the downside unless $66.76 is taken out with conviction.

The main downside target zone for December Brent crude oil remains its retracement levels at $75.11 to $74.10.