Oil Price Fundamental Daily Forecast – EIA Report to Show Sharp Rise in Crude Oil, Gasoline StockpilesAhead of Thursday’s OPEC meeting, traders are focused on whether the United States will join OPEC+ with production cuts of its own.
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher but near the low end of the range on Wednesday shortly before the regular session opening.
The markets are rebounding after a two-day decline, lifted by optimism that a meeting between OPEC members and major allied producers on Thursday will lead to output cuts to support prices that have deteriorated amid the coronavirus pandemic.
Traders Positioning Ahead of Thursday’s OPEC Videoconference
The mostly sideways price action on Wednesday indicates that traders are positioning themselves ahead of Thursday’s video conference meeting between members of the Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia.
Traders are expecting this meeting to be more successful than the OPEC+ meeting in early March, which ended in failure to extend cuts beyond the March 31 deadline, and the start of a price war between Saudi Arabia and Russia amid slumping demand.
However, doubts remain over whether the United States will be asked to participate in any production curbs.
Reuters reported that Saudi Arabia, other OPEC member countries and Russia, a grouping known as OPEC+, are likely to agree to cut output, but that the accord could be dependent on whether the United States could go along with cuts. The U.S. Department of Energy said on Tuesday that U.S. output is already declining without government action.
American Petroleum Institute Weekly Inventories Report
According to the API, U.S. crude inventories jumped by 11.9 million barrels to 473.8 million barrels in the week-ending April 3. With a drop in fuel demand amid the virus outbreak, gasoline stocks also rose by 9.4 million barrels, marking the biggest one-week gain in the API figures since January 2017.
Ahead of Thursday’s OPEC meeting, traders are focused on whether the United States will join OPEC+ with production cuts of its own.
“Saudi Arabia and Russia continue to hammer out a deal … What is clear is that the United States must be involved,” ANZ Research said in a note.
Official data from the U.S. Energy Information Administration (EIA) is due at 14:30 GMT on Wednesday. Traders expect the report to show a 9.8 million barrel build.
U.S. crude production is expected to slump by 470,000 bpd and demand is set to drop by about 1.3 million bpd in 2020, the EIA said on Tuesday.