Oil Price Fundamental Daily Forecast – Differing Opinions on Demand Pressuring Prices; Trade Concerns Re-Emerge

U.S. West Texas Intermediate and international-Brent crude oil futures are trading mixed on Wednesday. The U.S. market is the weaker of the two, following yesterday’s technically bearish closing price reversal top chart pattern. Prices are retreating from four-month highs reached on Tuesday on demand concerns due to the slowing global economy.

At 09:07 GMT, May WTI crude oil futures are trading $59.14, down $0.14 or -0.24% and May Brent crude oil is at $67.58, down $0.03 or -0.02%.

Despite the dampened outlook for global fuel consumption, the market is still being well-supported by the OPEC-led supply cuts and the U.S. sanctions against Iran and Venezuela.

Besides the concerns over demand, some traders are saying a rift between Saudi Arabia and Russia may be a contributing factor to the weakness. On Tuesday, OPEC announced the cancellation of its April meeting. This spiked prices higher because it indicated that the current production cuts would last into June. Afterwards, prices began to retreat amid reports that the Saudi’s were disappointed with Russia’s effort to cut supply. Some blamed this for the cancellation of the meeting.

American Petroleum Institute

Late Tuesday, the American Petroleum Institute (API) reported an unexpected draw in crude oil inventory of 2.133 million barrels for the week ending March 15. Traders were looking for a 309,000 barrel build.

The net draw is 1.5 million barrels for the eleven reporting periods so far this year.

The API also reported a draw in gasoline inventories for the week-ending March 15 in the amount of 2.794 million barrels. Analysts estimated a draw in gasoline inventories of 2.125 million barrels for the week.

Distillate inventories decreased by 1.607 million barrels. Traders were looking for a draw of 1.3 million barrels for the week.

Daily Forecast

The fundamentals and the technical chart pattern suggest we could be headed to a rangebound trade over the near-term.

Technically, the WTI resistance level to watch is $59.63 and yesterday’s closing price reversal top at $59.86. Brent has resistance at $67.74 to $68.22.

Differing opinions on demand growth in the near-term seem to be an issue at this time, which could mean traders are paying attention to the U.S.-China trade negotiations. Renewed concerns over the trade talks could give long investors as excuse to book profits.

Later today, the U.S. Energy Information Administration weekly inventories report is expected to show a 500,000 barrel build. A larger-than-expected build could put further pressure on prices. Gains could be limited even if the report shows an unexpected draw.