Oil Price Fundamental Daily Forecast – Feeling the Heat from Unexpected Rise in Crude, Gasoline Inventories

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging lower shortly after the New York opening on Thursday. Traders are taking profits from this week’s earlier gains as higher U.S. crude oil inventories and a strong U.S. Dollar offset recent forecasts calling for a supply deficits.

At 13:17 GMT, December WTI crude oil futures are trading $73.34, down $1.16 or -1.56% and December Brent crude oil futures are at $77.03, down $1.06 or -1.36%.

Last week’s rise in U.S. inventories came as production in the Gulf returned close to levels reached before Hurricane Ida struck about a month ago.

A power crisis and housing market concerns in China, the world’s biggest crude importer and its second-largest consumer behind the United States, is pressuring sentiment and weighing on oil demand.

American Petroleum Institute Weekly Inventories Report

The API on Tuesday reported a surprise build in crude oil inventories of 4.127 million barrels for the week ending September 24. Analyst expectations were for a loss of 2.333 million barrels for the week.

The API also reported a build in gasoline inventories of 3.555 million barrels for the same week. Distillate stocks saw an increase in inventories this week of 2.483 million barrels for the week.

US Energy Information Administration Weekly Inventories Report

U.S. crude oil, gasoline and distillate inventories rose last week as the production rebounded from recent storms, the Energy Information Administration said on Wednesday.

Crude oil inventories rose by 4.6 million barrels in the week to September 24 to 418.5 million barrels, EIA data showed, compared with analysts’ expectations in a Reuters poll for a 1.7 million-barrel drop.

U.S. gasoline stocks posted a modest gain of 193,000 barrels to 221.8 million barrels, compared with expectations for a 1.4 million-barrel rise.

Distillate stockpiles, which include diesel and heating oil, rose by 385,000 barrels in the week to 129.7 million barrels, versus expectations for a 1.6 million-barrel drop.

Short-Term Forecast

We’re looking for the short-term correction to continue with the minimum target for WTI at $72.66 to $71.80, and for Brent at $76.22 to $75.34. If these areas fail to attract enough buyers to continue the uptrend then look for the selling pressure to resume with the WTI target zone at $68.69 to $66.90 and the Brent target area at $71.93 to $70.04.

Despite the short-term setbacks, we’re maintaining our bullish outlook because of expectations of a continued supply deficit. Citigroup is forecasting oil balances to be in a 1.5 million barrel per day deficit on average over the next six months, even with continued supply increases.

Our near-term concerns are rapidly rising prices creating demand destruction and an increase in OPEC+ production.