Oil Price Fundamental Daily Forecast – Price Action Suggests Traders Doubt U.S. Claim It Will Keep Market Well-Supplied

U.S. West Texas Intermediate and international benchmark Brent crude oil futures are trading slightly better, recovering from an early session setback.

Prices retreated from their highs on Tuesday and the selling extended into Wednesday after the U.S. said it would ensure crude markets are well supplied. President Trump also reiterated calls on OPEC to pump more oil and stop raising prices. Also weighing on prices was an industry report showing U.S. crude stocks unexpectedly climbed last week.

At 0719 GMT, November WTI crude oil is trading $72.31, up $0.03 or +0.04% and December Brent crude oil is at $81.45, up $0.19 or +0.23%.

On Tuesday, Washington’s special envoy for Iran, Brian Hook, told a news conference at the United Nations General Assembly, “We will ensure prior to the reimposition of our sanctions that we have a well-supplied oil market.”

In other news, the American Petroleum Institute (API) reported a build of 2.903 million barrels of United States crude oil inventories for the week-ending September 21, compared to analyst expectations for a draw of 1.279 million barrels.

The API also reported a build in gasoline inventories for the week-ending September 21 in the amount of 949,000 barrels. Analysts were looking for a smaller build of 788,000 barrels in gasoline inventories for the week.

Distillate inventories were down this week by 944,000 barrels, compared with an expected build of 752,000 barrels. Additionally, inventories at the Cushing, Oklahoma, futures hub increased this week by 260,000 barrels.

Forecast

The tone in the market remains bullish despite the comments from Brian Hook and President Trump as well as the surprise inventories build.

You have to take Hook’s comments with a grain of salt because he didn’t say how he would accomplish his claim. Furthermore, he didn’t say where the extra output would come from. As it stands, he has from now until November 4 to make good on his claim that the U.S. will make sure there is enough oil around to keep the world well-supplied in oil.

Today’s U.S. Energy Information Administration weekly inventories report could cause some volatility when it is released at 1430 GMT. It is expected to show a draw of about 700,000 barrels. Given the miss by the API report, investors could already be pricing in a build.

For November WTI crude oil, the key long-term support remains $70.86. For bullish December Brent crude oil traders, the support remains the psychological $80.00 level.