Oil Price Fundamental Daily Forecast – Easing Fears of Global Economic Slowdown Supportive

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Wednesday, continuing their current four day rally.

WTI futures are now within striking distance of a key technical target at $63.45 after crossing to the strong side of its 200-Day moving average on Monday. Brent futures just crossed their 200-Day Moving Average on Tuesday, putting it well on its way to a key technical target at $71.77.

At 02:31, May WTI crude oil is trading $62.81, up $0.23 or +0.37% and June Brent crude oil is at $69.78, up $0.41 or +0.59%.

The markets are edging higher on Wednesday despite an industry report showing that U.S. inventories rose unexpectedly last week, with the focus continuing to be on the highly successful OPEC-led production cuts and the U.S. sanctions against Iran and Venezuela.

American Petroleum Institute Weekly Inventories Report

Late Tuesday, the American Petroleum Institute (API) reported a build in crude oil inventory of 3.0 million barrels for the week-ending March 29. Traders were looking for a 425,000-barrel draw.

The API also reported a draw in gasoline inventories for the week-ending March 29 in the amount of 2.6 million barrels. Analysts and traders were looking for a smaller draw in gasoline inventories of 1.542 million barrels for the week.

Distillate inventories decreased by 1.9 million barrels, compared to an expected draw of 506,000 barrels for the week.

Daily Forecast

Prices are expected to continue to climb on Wednesday because OPEC and its ally’s strategy to trim the global supply is working. Recent data showed that output is down for a fourth month. This is tightening the supply.

On the demand side, easing concerns about a global economic slowdown are also offering support. Early Wednesday, reports are circulating that the U.S. and China may be close to a trade deal. The announcement of a trade deal should spike prices higher, at least temporarily until traders can go through the details. Furthermore, it’s hard to predict how much of this has already been baked into the market.

In other bullish news, on Tuesday, a U.S. official said three of eight countries granted waivers by Washington to import oil from Iran have cut imports to zero. Additionally, Vice President Mike Pence said on Tuesday that the United States would continue to pressure Venezuela’s oil industry and those who support it with economic sanctions.

Finally, at 14:30 GMT on Wednesday, traders will get an opportunity to respond to the U.S. Energy Information Administration’s weekly inventories report. It is expected to show a 700,000 barrel drawdown.

Also start watching for the announcement of a U.S.-China trade deal. You don’t want to get caught on the wrong side of this announcement so be careful trading against the uptrend.