Oil Price Fundamental Daily Forecast – Longs Trimming Positions Ahead of API Inventory Report

The API will release its report at 20:30 GMT later today. The EIA will show its numbers on Wednesday at 14:30 GMT. In the meantime, investors are trying to digest the early forecast calling for an inventory build of around 700,000. Despite the early weakness, the markets are still being underpinned by the hope that the United States and China would reach at least a partial trade agreement sooner than expected.
James Hyerczyk
Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower as investors trim long positions ahead of the release of the American Petroleum Institute’s (API) weekly inventories report later in the session. The report should reveal to traders clues about demand trends in the wake of the slowing global economy. Additionally, losses are likely being softened by optimism over U.S.-China trade relations.

At 09:51 GMT, December WTI crude oil is trading $55.37, down $0.44 or -0.79% and December Brent crude oil is at $61.24, down $0.33 or -0.54%.

Inventories in Focus

Last week’s unexpected drop in U.S. inventories, according to the Energy Information Administration (EIA), drove prices sharply higher so this week’s report has taken on added importance since traders want to know if the decline was part of a developing trend, or just a “one-and-done” move.

“The inventory read last week is still reverberating through trading, although we did see that finally start to give way last night, but we can see there is very little appetite to go with it today,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

The API will release its report at 20:30 GMT later today. The EIA will show its numbers on Wednesday at 14:30 GMT. In the meantime, investors are trying to digest the early forecast calling for an inventory build of around 700,000.

Another number to watch will be U.S. crude oil stockpiles at the Cushing, Oklahoma futures hub. Stockpiles for WTI crude oil are forecast to have risen about 1.5 million barrels in the week through October 25, traders said earlier in the session, citing data from market intelligence firm Genscape.

Trade Talk Optimism, OPEC Production Cuts

Despite the early weakness, the markets are still being underpinned by the hope that the United States and China would reach at least a partial trade agreement sooner than expected. This idea was supported by President Trump on Monday when he said he expected to sign a significant part of the trade deal with China ahead of schedule but did not elaborate on the timing.

Crude oil bulls are also hoping OPEC and its allies continue to push for deeper production cuts at their December 5 -6 meeting.

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