Oil Price Fundamental Daily Forecast – IEA says market ‘Adequately Supplied’, Capping Gains

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower shortly before the regular session opening. The markets are trading inside the previous day’s range, which could be an indication of investor indecision and impending volatility.

There were no major fundamental changes overnight, but there was a report that indicated the market was currently well-supplied. Furthermore, a second report also came to the same conclusion. The fresh supply numbers could be providing buyers with an excuse to book profits. General nervousness ahead of today’s government inventories report is also weighing on prices.

At 11:47 GMT, June WTI crude oil is at $66.09, down $0.21 or -0.32% and June Brent crude oil is at $74.44, down $0.07 or -0.09%.

American Petroleum Institute Weekly Inventories Report

The early weakness is being partly fueled by a report from the API which showed a build in crude oil inventory of 6.86 million barrels for the week-ending April 19, coming in higher than analyst expectations of a 167,000-barrel drawdown.

The API data also showed a net build of 11.30 million barrels for the 17-week reporting period.

The API also reported a draw in gasoline inventories as well for the week-ending April 18 in the amount of 1.82 million barrels. Analysts were looking for a draw of 333,000 barrels for the week. Distillates fell by 865,000 barrels, largely in line with analyst predictions of 712,000 barrels.

International Energy Agency

A report from the IEA is also weighing on prices. It said on Tuesday that the crude oil markets are “adequately supplied” and that “global spare production capacity remains at comfortable levels.”

Supply Side Fundamentals

Continuing to underpin prices are the OPEC-led production cuts and the U.S. sanctions against Venezuela and Iran. Traders are also expressing concerns over the escalating military activity in Libya.

Daily Forecast

There are reports that the U.S. is counting on Saudi Arabia as a partner to balance the oil markets. This could mean the de facto OPEC leader may soon announce an increase in production to make up for the reportedly 1 million barrels per day lost to the increased sanctions against Iran.

Russia is also reportedly planning to exit the OPEC-led deal to trim production. It wants to ramp up production to capture market share currently held by the United States.

Finally, China, Iran’s biggest oil customer, has formally complained about the U.S. order to end all exemptions for sanctions against Iran by May, or face punitive action.

In the U.S. at 14:30 GMT, the Energy Information Administration is expected to report that U.S. crude oil inventories rose by 900,000 barrels.