Oil Price Fundamental Daily Forecast – Early Support from Increased Demand

U.S. West Texas Intermediate and international-benchmark crude oil recovered from earlier weakness on Thursday to post a slightly higher close. The markets were primarily supported by OPEC-led supply cuts designed to trim the global supply glut and stabilize prices as well as expectations for strong demand.

December WTI crude oil settled at $54.54, up 0.24 or +0.44% and January Brent crude oil closed the session at $60.62, up $0.13 or +0.21%.

The bullish sentiment underpinning the current rally is being provided by expectations the OPEC-led program to curb production will be extended beyond the March 2018 deadline into the end of the year.

News of rising demand is also being supportive. China’s oil demand growth appears to be accelerating with the country importing roughly 9 million barrels per day, surpassing the United States as the world’s biggest crude importer.

Additionally, global crude inventories, especially in the U.S., have drawn down as oil markets have been slightly undersupplied during the past quarters, although the outlook for next year is uncertain.

Finally, the Energy Information Administration (EIA) said this week that the latest U.S. crude oil export figures rose a record 2.1 million bpd.

Forecast

There are no major reports today regarding crude oil. The U.S. will release its latest Non-Farm payrolls report. We could see increased demand for crude oil if the U.S. Dollar weakens significantly and a drop in foreign demand if the news is bullish for the dollar.

Technical factors have played a significant role in this week’s price action. Although the WTI market is expected to finish higher for the week, upside momentum has slowed with the formation of a potentially bearish closing price reversal top on November 1 at $55.22.

Taking out $55.22 with conviction will signal a resumption of the uptrend with $56.16 the next upside target. If sellers take control, we could see a near-term drift into $53.75.