Oil Price Fundamental Daily Forecast – EIA, OPEC Data Not Strong Enough to Reverse Downtrend

U.S. West Texas Intermediate and international-benchmark crude oil futures finished slightly lower on Wednesday in a volatile trading session. Early in the session, prices plunged after China proposed a broad range of tariffs on U.S. goods that increased fears of a trade war.

May WTI crude oil settled at $63.37, down $0.14 or -0.22% and June Brent crude oil closed at $68.02, down $0.10 or -0.15%.

Prices began to mount a comeback after the release of a friendly government inventories report and a massive turnaround in the U.S. stock market.

According to the U.S. Energy Information Administration, U.S. crude inventories fell by 4.6 million barrels in the week-ended March 30. Analysts were expecting an increase of 246,000 barrels.

The EIA data showed the drop in inventories was fueled by a rise in refinery crude runs which jumped by 141,000 barrels per day. Refinery utilization rates rose by 0.7 percentage points.

Gains may have been limited by a report of a 3.666 million barrel build at the Cushing, Oklahoma futures storage hub.

The market received additional support from a report showing OPEC oil production fell in March to an 11-month low due to declining Angolan exports, Libyan outages and a further slide in Venezuelan output.

Forecast

Crude oil futures are trading slightly better early Thursday, buoyed by Wednesday’s friendly EIA report and increased demand for risky assets.

At 0619 GMT, May WTI crude oil is trading $63.61, up $0.24 or +0.38% and June Brent crude oil is at $68.34, up $0.32 or +0.47%.

Technical factors also played a role in the crude oil reversal. WTI found support on a longer-term 50% level at $62.08. If the upside momentum continues, we’re likely to see a follow-through rally into $64.31 to $64.83.

Brent crude found support on a 50% level at $66.85. If the upside momentum continues, we should see a move into $68.54. This price is likely to act like a pivot.

With the inventories reports out of the way, the price action is likely to be determined by trader reaction to appetite for risk. Look for the market to be underpinned if investors continue to demand risky assets.