Oil Price Fundamental Daily Forecast – Nearly Flat Trade Ahead of API Report

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging lower on Tuesday after posting a wicked two-sided trade the previous session before closing lower.  The markets are being underpinned by an expected U.S.-China trade deal and upbeat industrial data from China, but the extremely low holiday volume is helping to keep a lid on gains.

At 09:30 GMT, February WTI crude oil is trading $61.61, down $0.07 or -0.11%. March Brent crude oil is at $66.66, down $0.01 or -0.01%.

U.S.-China Trade Relations

Investor sentiment has largely improved in December with the U.S. and China recently reaching an agreement on a phase one trade deal.

The South China Morning Post, citing a source, reported Monday that top Chinese trade negotiator and Vice Premier Liu He is set to visit Washington this week to sign the phase one deal with the U.S.

Beijing has accepted the U.S. invitation for a deal signing in Washington, and the Chinese delegation will stay in the U.S. for a few days until the middle of next week, according to the report.

Upbeat Industrial Data from China

China’s official manufacturing Purchasing Managers’ Index (PMI) for December came in slightly above expectations on Tuesday, according to the country’s statistics bureau.

The PMI figure for December came in at 50.2, slightly above expectations of a 50.1 reading by economists in a Reuters poll.

Other News

On Sunday, the United States carried out air strikes on Sunday against the Kataib Hezbollah militia group, while protesters in Iraq on Saturday briefly forced the closure of its southern Nassiriya oilfield.

Libyan state firm NOC said it is considering the closure of its western Zawiya port and evacuating staff from the refinery due to clashes nearby.

Daily Forecast

The market didn’t go up on the U.S. bombing news because the oil supply wasn’t affected. Demand growth optimism has been at the forefront since the trade deal was reached on December 13. Late Tuesday, supply will move to the forefront with the release of the American Petroleum Institute’s Weekly Inventories report.

Looking ahead, U.S. crude inventories are expected to fall by about 3.2 million barrels in the week to December 27, heading for a third consecutive weekly fall, a preliminary Reuters poll showed on Monday.