Oil Price Fundamental Daily Forecast – OPEC Wants to Meet With U.S. Shale Oil Producers

U.S. West Texas intermediate and international-benchmark Brent crude oil closed higher on Monday after erasing earlier losses. Prices fell early in the session in reaction to a report that predicted a major spike in U.S. oil output in the next five years.

April WTI Crude Oil settled at $62.57, up $1.32 or +2.16% and May Brent Crude Oil finished at $65.54, up $1.17 or +1.82%.

The International Energy Agency (IEA) early Monday revised U.S. oil output growth up sharply, saying the country would be producing a total of nearly 17 million barrels per day in 2023, up from 13.2 million last year, eating into OPEC’s market share and moving closer to self-sufficiency.

Prices posted a rapid turnaround to close higher for the session after the same report forecast robust oil demand growth and concerns OPEC will not be able to increase its production capacity.

The stronger U.S. Dollar had a limited effect on crude oil prices, but increased demand for higher risk assets gave oil investors the confidence to play the long side.

Forecast

Crude oil prices inched up on Tuesday as investors continue to respond positively to the IEA’s bullish outlook for future demand. Traders are also saying that the prospects for informal talks bought by OPEC with U.S. shale oil producers at a key industry meeting in Houston this week are also underpinning prices.

At 0541 GMT, April WTI Crude Oil is trading $62.69, up $0.12 or +0.19% and May Brent Crude Oil is at $65.63, up $0.09 or +0.14%.

The IEA report is a long-term outlook and subject to change several times over the years. It is probably based on the current global recovery so naturally it is going to show increasing demand. However, any slowdown in the global economy and especially a recession in the U.S., is likely to alter their forecast at some time in the future.

Over the short-run, prices are likely to be influenced by the direction of the U.S. Dollar, concerns over increasing U.S. production and worries about adherence to OPEC’s plan to limit supply.

On Tuesday, prices are likely to be influenced by the American Petroleum Institute’s weekly inventories report.

Data from Genscape reportedly show a sizable decline in last week’s crude supplies at Cushing, according to Bloomberg, which notes that supplies at the key pipeline hub are already at their lowest level since 2014. A forecast complied by Bloomberg also revealed that crude inventories at the hub fell by 600,000 barrels last week.

The short-term and long-term charts show that WTI crude will maintain its upside bias as long as prices can hold above $62.27 to $62.19.