Oil Price Fundamental Daily Forecast – EIA Report Expected to Show 4.2M Draw

U.S. West Texas Intermediate and international-benchmark Brent crude oil are trading mixed on Wednesday, shortly before the regular session opening. The markets are trading inside yesterday’s ranges which means there was no follow-through to the upside following the release of a potentially bullish industry oil report. It also indicates, however, the markets remain underpinned by concerns over a possible supply disruption in the Middle East due to tensions between the United States and Iran and the United Kingdom and Iran.

At 10:42 GMT, September WTI crude oil is at $56.83, up $0.06 or +0.07% and September Brent crude oil is at $63.73, down $0.10 or -0.16%.

American Petroleum Institute Weekly Inventories Report

Crude oil prices jumped late Tuesday following a report that showed the largest crude inventory draw of the year.

The API reported a huge crude oil draw of 10.961 million barrels for the week-ending July 18. Analysts were looking for a decline of 4.011 million barrels. The net build for the year is now just 1.20 million barrels for the 30-week reporting period so far this year, according to API data.

The API also reported a 4.436-barrel build in gasoline inventories for the week-ending July 18. Analysts were looking for a draw in gasoline inventories of 730,000 barrels.

Distillate inventories grew by 1.420 million barrels for the week, while inventories at the futures hub in Cushing Oklahoma fell by 448,000 barrels.

In other news, which could have an impact on future demand, U.S. trade negotiators will head to China to recommence trade talks. U.S. trade negotiators are planning to head to China for face-to-face talks as the two economic powerhouses try to strike a deal, sources told CNBC.

Daily Forecast

The markets are up for the week, but when compared to the price action for the month, they are rangebound. This is likely because concerns over supply are being offset by worries over demand. We’re expecting this type of trade to continue the rest of the week unless today’s U.S. Energy Information Administration report proves to be bullish.

Today’s EIA report, due to be released at 14:30 GMT, is expected to show a draw of 4.2 million barrels.

As far as the tensions in the Middle East, unless there is an actual supply disruption or prolonged military action, gains from speculative buying are likely to be capped by demand concerns.