Oil Price Fundamental Daily Forecast – Prices Could Break as Iran Unrest is not Likely to Impact Supply

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures settled lower on Tuesday after buyers backed away from an early session surge fueled by a reaction to anti-government protests in Iran.

On Tuesday, February WTI crude oil settled at $60.37, down $0.05 or -0.08% and March Brent crude oil finished at $66.57, down $0.30 or -0.45%.

Prices dipped into the close on the news that the major pipelines in Libya and the U.K. restarted. The 450,000 barrel per day (bpd) capacity Forties pipeline system in the North Sea returned to full operations on December 30 after an unplanned shutdown. Repairs were also completed on a Libyan oil pipeline which was damaged in a suspected terrorist attack last week.

Forecast

Volume is low and the range is tight early Wednesday, leading to a mixed trading session. At 0705 GMT, February WTI crude oil is trading $60.38, up $0.01 or +0.01% and March Brent crude oil is at $66.56, down $0.01 or -0.02%.

Oil prices are stable, but still within striking distance of their mid-2015 highs reached on Tuesday. The market remains underpinned by strong demand and optimism over the ongoing efforts by OPEC and Russia to curb output, trim the global supply and stabilize prices. Pressure, however, could come from rising U.S. production and doubts about whether demand growth can continue at current levels.

With the pipeline issues in the North Sea and Libya resolved and the protests in Iran showing no signs of impacting its oil production, prices could slide this week especially if this week’s U.S. government reports show another rise in production.

U.S. oil production has risen by almost 16 percent since mid-2016, hitting 9.75 million bpd at the end of last year. It seems like it’s just a matter of time before U.S. production hits 10 million bpd.

WTI prices could retreat to the former tops at $58.99 to $58.60 now that the Libyan pipeline explosion and the Forties pipeline outage are history.

Brent crude oil posted a higher-high, lower-close on Tuesday. If the selling pressure continues then look for a possible break back to its former top at $64.92.

On Thursday, the U.S. Energy Information Administration’s weekly inventories report is expected to show a draw of about 5.2 million barrels.