Oil Price Fundamental Daily Forecast – EIA Report Expected to Show 4.1M Barrel Build

U.S. West Texas Intermediate and international-benchmark Brent crude oil settled higher on Tuesday. The catalyst behind the strength was a report showing OPEC oil production fell for the first time since March. Helping to limit gains was a stronger U.S. Dollar which could have an impact on demand.

November WTI crude oil settled at $48.75, up $0.13 or +0.27% and December Brent crude oil finished the session at $54.03, up $0.34 or +0.63%.

According to a monthly report, OPEC’s oil output fell in August for the first time since March as several key exporters in the cartel throttled back production.

The report showed the cartel pumped 32.76 million barrels a day last month, according to independent sources that monitor OPEC’s production. This was a 79,100 barrel-a-day drop from July.

Earlier in the week, prices received support as Saudi Arabia held discussions about extending the deal to curb production, reduce supply and stabilize prices beyond the March deadline.

Forecast

WTI and Brent crude oil futures are trading lower early Wednesday following the release of mixed inventories data from the American Petroleum Institute (API).

According from the American Petroleum Institute, crude oil inventories increased 6.181 million barrels in the United States during the week-ending September 8. Analysts were looking for a build of 10.1 million barrels.

Gasoline inventories fell more than anticipated by 7.896 million barrels for the week-ending September 8, against an expected draw of 4.0 million barrels.

The inventories data was skewed as many refineries in the Gulf Coast remain offline and demand in Florida wanes in the wake of Hurricane Irma.

The data seems to have been enough to put a temporary cap on Tuesday’s rally that was fueled by reports of lower production from OPEC in August.

Some bearish investors are saying the OPEC data was not a true assessment of production because the numbers were lowered by unrest in Libya which contributed the country’s 112,300-barrel decline in August’s production.

Today’s U.S. Energy Information Administration’s weekly inventories report is expected to show a 4.1 million barrel build. I think investors are going to give this estimate some room on either side because the data from the Gulf region affected by Hurricane Harvey is still skewed.

The market is trading inside a major retracement zone on the daily chart. November WTI crude oil is expected to have a bullish tone on a sustained move over $48.91 and a bearish tone on a sustained move under $48.38.