Oil Price Fundamental Daily Forecast – Inching Higher as Production Gradually Resumes

U.S. West Texas Intermediate and international-benchmark Brent crude oil finished mixed on Monday. Early in the session, investors pulled money out of the oil markets and move it to the safety of gold. However, WTI crude was able to overcome the early selling while Brent took the brunt of the selling pressure.

October WTI crude oil settled at $47.37, up $0.08 or +0.17% and November Brent crude oil closed at $52.34, down $0.41 or -0.78%. Volume was well-below average because of the U.S. bank holiday.

Traders said the price action in WTI crude suggests more stable conditions due to last week’s production outages following Hurricane Harvey. About 5.5 percent of the U.S. Gulf of Mexico’s oil production, or 96,000 barrels of daily output, remained shut on Sunday, the federal Bureau of Safety and Environmental Enforcement said.

At the same time, refineries that use crude to make fuel were gradually starting up again, along with the pipelines transporting products. This is a potentially bullish development for WTI crude oil.

Forecast

Crude oil prices are inching higher early Tuesday in reaction to the gradual restart of Texas Gulf Coast oil refineries after production was halted last week due to the impact of Hurricane Harvey. Increased production is helping to drive up crude oil demand which is potentially bullish.

The restarting of the refineries is also expected to lead to a steep break in gasoline as fears of a serious supply shortage faded.

The early price action suggests WTI crude oil may be building enough upside momentum to fuel a rally into at least $48.05 to $48.63 over the near-term.

In other news, this week’s reports have all been pushed back a day due to Monday’s U.S. bank holiday. Therefore, the American Petroleum Institute’s weekly inventories report will be released on Wednesday and the U.S. Energy Information Administration’s weekly inventories report will come out on Thursday.

Last week’s EIA report showed a 5.4 million barrel draw down. This week’s report is expected to show a build due to the drop in demand caused by the impact of the hurricane.