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Oil Price Fundamental Daily Forecast – Dollar Driving the Price Action

By:
James Hyerczyk
Published: Feb 21, 2018, 07:50 UTC

Crude oil prices are trading lower early Wednesday, pressured by the U.S. Dollar and an expected rise in U.S. production.

Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures settled higher on Tuesday after posting a two-sided trade during the session. Early in the trading session, U.S. crude was supported by pipeline reductions in Canada. Brent crude oil eased on the back of a dip in Asian stocks and a stronger U.S. Dollar.

April WTI crude oil settled at $61.79, up $0.24 or +0.39%. April Brent crude finished the session at $65.25, up $0.41 or +0.63%.

While both crude benchmarks continue to derive support from increased expectations of tighter supply later this year, most of late session rally was due to position-squaring ahead of Wednesday’s American Petroleum Institute’s inventories report.

WTI Crude Oil
Daily April WTI Crude Oil

Forecast

Crude oil prices are trading lower early Wednesday, pressured by the U.S. Dollar and an expected rise in U.S. production.

At 0732 GMT, April WTI crude oil is trading $61.12, down $0.67 or -1.08% and April Brent crude oil is at $64.67, down $0.58 or -0.89%.

Today, the oil market is likely to react to the Fed minutes due to be released on Wednesday. Hawkish Fed minutes could drive the dollar higher, which could put pressure on dollar-denominated crude oil futures.

Due to Monday’s U.S. holiday, there was no API report on Tuesday. It will be released later today. The U.S. Energy Information Administration’s weekly inventories report will be released one-day later on Thursday.

Brent Crude
Daily April Brent Crude

Traders are driving prices lower early Wednesday because they are concerned about rising U.S. production. The U.S. is now producing more than 10 million barrels per day (bpd), only slightly behind Russia and ahead of top exporter Saudi Arabia.

Both the API and EIA reports are expected to show crude oil stockpiles rose 1.3 million barrels in the week to February 16. Oil product stockpiles, including gasoline and distillate fuels, are all expected to decline.

At this time, the oil market is roughly balanced, with risks around that view tilted towards surplus. The direction of the dollar should also be viewed as important since it will affect the demand picture.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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