Oil Price Fundamental Daily Forecast – Bulls Waiting for Next Catalyst to Drive Prices Higher

U.S. West Texas Intermediate and international-benchmark Brent crude oil is trading lower early in the session on Monday. Volume is also light and the range is tight. The price action suggests bullish traders are waiting for the next catalyst to drive prices higher after the disappointing major producers meeting in Vienna.

At 0523 GMT, November WTI crude oil is trading $50.51, down $0.15 or -0.28% and December Brent crude oil is trading $56.34, down $0.08 or 0.14%.

Major producers meeting in Vienna said the market was well on its way towards rebalancing, but the movement in the market suggests investors want to see the proof.

“Since our last meeting in July, the oil market has markedly improved,” said Kuwaiti Oil Minister Essam al-Marzouq, who chaired Friday’s meeting, of the Joint Ministerial Monitoring Committee.

On Friday, investors were a little disappointed that OPEC and non-OPEC producers couldn’t decide on a production cut extension. However, comments from Russia’s energy minister indicated that it would be coming before January. Other oil ministers suggested it would come earlier.

In other news, U.S. energy firms cut the number of oil rigs operating for a third week in a row. Hedge funds also increased bets on U.S. crude oil to the highest level in one month.

Forecast

Crude oil markets could move sideways today in the absence of fresh data. The market is being underpinned by strong talk of it rebalancing. Bullish chatter about increasing demand from OPEC and the International Energy Administration is also providing support. However, what the market needs right now is more buyers to launch the next leg up.

The hedge funds may be long but they are going to have to add to these positions to drive prices higher. Currently, the WTI market is straddling $50.30. Trader reaction to this level will tell us if the hedge funds are willing to buy strength or a pullback into support.

Look for a bullish tone to develop today on a sustained move over $50.30 and for a bearish tone to develop today on a sustained move under this level.