Oil Price Fundamental Daily Forecast – Rebounding as Robust Asian Demand Offsets API Build; EIA on Tap

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Wednesday after reversing earlier losses caused by an unexpected build in U.S. stockpiles, according to an industry report. Traders are saying the rebound is being fueled by signs of robust demand recovery in Asia.

At 10:51 GMT, January WTI crude oil futures are trading $42.07, up $0.42 or +1.01%, up from a low of $41.30. January Brent crude oil futures are at $44.23, up $0.48 or +1.10%.

Asian Buying Interest Strong

According to Bloomberg, refiners in China, Japan and South Korea snapped up cargoes from Russia, the Middle East and the United States, leading to a gain in physical crude prices. Buying interest has been strong after some refiners got less oil than usual in term supply contracts from OPEC producers Saudi Arabia and Iraq.

American Petroleum Institute Weekly Storage Report

The API reported on Tuesday a build in crude oil inventories of 4.174 million barrels for the week ending November 13. Traders were looking for an inventory build of 1.95-million barrels.

The API also reported a build in gasoline inventories of 256,000 barrels of gasoline for the week ending November 13—compared to the previous week’s 3.297-million-barrel draw. Analysts had expected a 450,000-barrel build for the week.

Distillate inventories were down by 5.024-million barrels for the week, compared to last week’s 5.619-million-barrel draw, while Cushing inventories rose by 176,000 barrels.

U.S. oil production was unchanged in the last reporting week, at 10.5 million bpd, according to the Energy Information Administration – 2.6 million bpd lower than the all-time high of 13.1 million bpd reached in March.

Daily Forecast

Signs of strong demand recovery in Asia are offsetting a jump in U.S. crude stockpiles, which may shift the focus to a decision on extended production cuts by OPEC and its allies.

OPEC and its allies gave reassurance at a committee meeting on Tuesday that they’re ready to act to keep markets stable later this month. The OPEC+ coalition is increasingly minded to delay plans to restore more of the output they’ve halted this year to stave off a glut.

OPEC+ is scheduled to gather at the end of the month for a ministerial meeting that will set its production policy. A technical panel on Monday suggested the group consider holding off on production increases by three to six months, but Saudi Energy Minister Prince Abdulaziz bin Salman said the market is too fluid to make a decision now, Bloomberg reported.

Today’s EIA Weekly Inventories Report, due to be released at 15:30 GMT, is expected to show a 1.7 million barrel crude oil build.

For a look at all of today’s economic events, check out our economic calendar.