Oil Price Fundamental Daily Forecast – EIA Report Expected to Show 3.0 Million Build

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading flat-to-higher on Wednesday, continuing to be underpinned by worries over supply disruptions following U.S. sanctions on Venezuela’s oil industry, but capped by concerns over rising U.S. production and lower demand due to the weakening global economy. The markets are also being supported by a private report that showed a smaller than expected weekly inventories build.

At 08:59 GMT, March WTI crude oil futures are trading $53.40, up $0.09 or +0.15% and March Brent crude oil is at $61.35, up $0.03 or +0.05%.

Venezuelan Sanctions

On Monday, Washington announced export sanctions against Venezuela’s state-owned oil firm PDVSA, limiting transactions between U.S. companies that do business with Venezuela through purchases of crude oil and sales of refined products.

The sanctions aim to freeze sale proceeds from PDVSA’s exports of roughly 500,000 barrels per day (bpd) of crude oil to the United States.

American Petroleum Institute (API) Weekly Report.

The American Petroleum Institute (API) reported a crude oil inventory build of 2.098 million barrels for the week-ending January 25. Analysts were looking for a build of 7.97 million barrels.

The API also reported a build in gasoline inventories for the week-ending January 25 in the amount of 2.2 million barrels. Analysts had priced in a build of 4.050 million barrels. Distillate inventories increased last week by 211,000 barrels, compared with an expected draw of 617,000 barrels.

Forecast

Traders continue to digest the impact of the Venezuela sanctions with some concerns on both ends. Right now, it’s being treated as a supply disruption. Anytime that term is mentioned, short-covering ensues.

According to reports, so far the sanctions have been mostly disruptive for refiners on the U.S. Gulf Coast, who are being forced to seek alternative heavy crude supplies, and have stepped up purchases of crude oil and sales of refined products. However, investors are concerned about pipeline capacity bottlenecks in Canada.

Bearish traders feel that Venezuelan export volumes will not be eliminated from the market, but rather rerouted to other countries, with China and India likely to pick up the slack at great discounts.

Later today at 15:30 GMT, the U.S. Energy Information Administration Weekly Inventories report is expected to show a build of 3.0 million barrels.