Oil Price Fundamental Daily Forecast – Falls Further After GDP Misses Estimate

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower on Thursday amid concerns over a surprise rise in U.S. crude oil inventories. Additionally, demand concerns due to worries over a slowdown in the global economy are also weighing on prices. However, prices remain underpinned by the OPEC-led supply cuts and the U.S. sanctions against Iran and Venezuela. Additionally, investor optimism over the resumption of negotiations between the U.S. and China may be providing some support. At this time, the price action and the fundamentals suggest a more balanced trade at current price levels.

At 12:21 GMT, May WTI crude oil is trading $58.57, down $0.84 or -1.38% and June Brent crude oil is at $66.41, down $0.83 or -1.23%.

Energy Information Administration

On Wednesday, the U.S. Energy Information Administration (EIA) reported a moderate build in U.S. crude oil inventories for the week to March 22. This came as a surprise because investors were hoping for a 1.1 million dollar drawdown.

Additionally, gasoline production averaged 9.7 million bpd last week, from 9.9 million bpd in the week before. Gasoline inventories fell by 2.9 million barrels, after a draw of 4.6 million barrels in the previous week. Furthermore, distillate fuel production averaged 4.9 million bpd last week, virtually unchanged on the week. Distillate fuel inventories fell by 2.1 million barrels.

Daily Forecast

At this time, concerns over demand are outweighing the tightening supply so prices are likely to continue to retreat until WTI and Brent reach a value area. For May WTI crude oil, this could be as low as $57.63 to $56.98. June Brent’s downside target zone is $66.23 to $65.70, but if this zone fails, we could see a further decline into $64.03 to $62.99.

In breaking news, the final reading for fourth-quarter GDP came in at 2.2 percent, lower than the 2.6 percent previous estimate and the 2.4 percent estimate. This news is putting additional pressure on prices.