Oil Price Fundamental Daily Forecast – EIA Expected to Report 3.6 Million Barrel Crude Oil Drawdown

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher on Wednesday shortly before the release of today’s government inventories report. The markets are being supported by industry data from late Tuesday that showed a larger than expected drawdown in U.S. crude inventories and on expectations of strong future demand on the back of increasing vaccination rates.

At 13:17 GMT, December WTI crude oil futures are trading $71.26, up $1.43 or +2.05% and December Brent crude oil futures are at $74.33, up $1.36 or +1.86%.

Meanwhile, traders are continuing to monitor the progress on production damage caused by the impact of Hurricane Ida from two weeks ago. At the same time, it looks as if Tropical Storm Nicholas missed Texas refineries. Nonetheless, it is responsible for leaving hundreds of thousands of homes and businesses without power.

American Petroleum Institute Weekly Inventories Report

The API on Tuesday reported a draw in crude oil inventories of 5.437 million barrels for the week-ending September 10. It exceeded analyst expectations for a 3.903 million barrel build for the week.

The API reported a draw in gasoline inventories of 2.761 million barrels for the week ending September 10 – compared to the previous week’s 6.414-barrel build.

Distillate stocks saw a decrease in inventories this week of 2.888 million barrels for the week, compared to last week’s 3.748-million barrel decrease.

The futures hub at Cushing, Oklahoma fell this week by 1.345 million barrels after last week’s 1.794-million-barrel increase.

Vaccine Set to Unleash Pent-Up Oil Demand – IEA

On Tuesday, the Paris-based International Energy Agency (IEA forecast a robust rebound in the market from the fourth quarter of the year citing “strong pent-up demand and continued progress in vaccination programs”.

“Already signs are emerging of COVID cases abating with demand now expected to rebound by a sharp 1.6 million barrels per day (bpd) in October, and continuing to grow until end-year,” the IEA wrote in its monthly oil report.

Daily Forecast

The focus early Wednesday will be on the U.S. Energy Information Administration (EIA) weekly inventories report, due to be released at 14:30 GMT. It is expected to show a crude oil drawdown of 3.6 million barrels.

A big drop in gasoline inventories could drive prices sharply higher.

Over the past week, oil inventories were affected significantly by a sharp decrease in U.S. oil production, which fell 1.5 million bpd last week – the sharpest single-week decline since the EIA began tracking data – to just 10 million bpd as Hurricane Ida continued to shut in oil producers in the Gulf of Mexico.

Oil inventories have shed more than 70 million barrels so far this year API data shows, and EIA suggests inventories are 6% under the five year average for this time of year.