Oil Price Fundamental Daily Forecast – EIA Reports 2.4 Million Barrel Build, Slightly Below Expectations

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging lower on Wednesday as renewed worries over the demand recovery in Europe outweighed a weekly inventories report from the American Petroleum Institute (API) that showed U.S. crude inventories unexpectedly fell last week.

Traders are now awaiting the weekly inventories report from the U.S. Energy Information Administration (EIA) at 14:30 GMT. It is expected to show a 2.8 million barrel build. An unexpected draw will likely garner the same response from traders as the API data, however, a larger-than-expected build is likely to extend losses.

At 14:20 GMT, May WTI crude oil futures are trading $64.21, down $0.65 or -1.00% and June Brent crude oil is at $67.19, down $0.68 or -1.00%.

European COVID-19 Concerns Weighing on Demand

According to Reuters, several European countries have paused the use of AstraZeneca’s COVID-19 vaccine due to worries over possible side effects. German is seeing rising coronavirus cases, while Italy is imposing a nationwide Easter lockdown.

“The suspension will not do the bloc’s economic and fuel recovery any favors,” said Stephen Brennock of oil broker PVM. “The hope now is that Europe can get its sluggish vaccine rollout back on track.”

International Energy Agency Issues Warning

The IEA said a supercycle was unlikely, demand won’t return to pre-pandemic levels until 2023 and could peak earlier than previously thought. The potentially bearish statements helped pressure prices.

American Petroleum Institute Weekly Storage Report

The API reported on Tuesday a surprise draw in crude oil inventories of 1 million barrels for the week-ending March 12. Analysts had predicted an inventory build of 2.964-million barrels for the week.

The API also reported a draw in gasoline inventories, of 926,000 barrels for the week-ending March 12 –on top of the previous week’s 8.499-million-barrel draw. Analysts had expected a 2.996-million-barrel draw for the week.

Distillate stocks saw an increase in inventories this week, of 904,000 barrels for the week, after last week’s 4.796-million-barrel decrease.

U.S. oil production rose by 900,000 bpd million barrels per day to 10.9 million bpd, according to the EIA.

Breaking News

The EIA weekly inventories report showed a 2.4 million barrel crude oil build, slightly below the 2.8 million barrel forecast. This mildly bullish news may not be enough to offset the renewed worries over European demand.

Our short-term forecasts calls for WTI crude to change its trend to down on a move through $63.10. The next potential downside target zone is $63.44 to $62.41.

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