Oil Price Fundamental Daily Forecast – EIA Reports 1M Inventory Build, Smaller than Expectations

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading flat shortly before the release of the government’s weekly inventories report. Traders are bracing for a reported draw in crude oil stocks after the American Petroleum Institute (API) reported an unexpected drop in supply late Tuesday.

At 14:32 GMT, December WTI crude oil is trading $83.30, down $0.77 or -0.92%.

Oil Prices Surge on Surprise Crude Draw

The American Petroleum Institute (API) on Tuesday reported its first crude oil inventory draw in six weeks. The API estimated for the week-ending November 5, a crude oil draw of 2.485 million barrels. Analysts were looking for a build of 1.90-million barrels for the week.

Despite six weeks of builds, U.S. crude inventories are still 60 million barrels below where they were at the beginning of the year – and low enough to continue to keep the upward pressure on the market.

The API also reported a draw in gasoline inventories as well, of 552,000 barrels for the week ending November 5 – compared to the previous week’s 552,000-barrel draw.

Distillate stocks saw an increase in inventories of 573,000 barrels for the week, on top of last week’s 573,000-barrel increase.

The U.S. Energy Information Administration (EIA) official oil inventory data is expected to show a small build of 1.6 million barrels.

Market Remains Tight

Further underpinning the view the market remains tight, trading giant Vitol Group’s CEO, Russell Hardy, said on Tuesday that oil demand had returned to pre-pandemic levels and demand in the first quarter of 2022 could exceed 2019 levels.

“The possibility of a spike to $100 per barrel is clearly there,” Hardy told the Reuters Commodities Summit.

Daily Forecast

In breaking news, the U.S. Energy Information Administration (EIA) reported a 1.0 million build in crude inventories for the week-ending November 5. While not as bullish as the API numbers, it should be enough to support the market although there could be some giveback of yesterday’s gains.

There are two wildcards in the works. One is bullish and one is potentially bearish.

On the bullish side, the EIA is reporting that crude oil demand is rebounding faster than supply, pushing prices higher.

On the potentially bearish side, the market is still waiting to see if the Biden Administration releases crude and gasoline from the U.S. Strategic Reserve. If they do then the market could feel some short-term pressure.