Oil Price Fundamental Daily Forecast – Recession Fears Weigh Ahead of EIA Report, Iran Nuclear Deal Decision

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are inching higher shortly before the release of the weekly government inventory report on Wednesday. The markets are trying to stabilize after U.S. crude touched a six-month low the previous session.

Technically speaking, both futures contracts are currently testing major support areas, which is probably helping to attract enough counter-trend buyers to prevent a complete washout.

At 14:04 GMT, October WTI crude oil is trading $86.62, up $0.46 or +0.53% and December Brent crude oil is at $91.24, up $0.18 or +0.20%. The United States Oil Fund ETF (USO) is at $71.86, up $0.62 or +0.87%.

Although the markets have stabilized, lingering concerns about the prospect of a global recession that would weaken demand, are capping prices. Perhaps providing a little support is a private industry report showing lower U.S. crude and gasoline inventories.

American Petroleum Institute Weekly Inventories Report

The API reported a draw for crude oil of 448,000 barrels during the week-ending August 12. Analysts predicted a smaller draw of 117,000 barrels.

The draw took place even as the Department of Energy released 3.4 million barrels from the Strategic Petroleum Reserves in the week-ending August 12, to 461.2 million barrels.

The API also reported a draw in gasoline inventories this week of 4.480 million barrels for the week-ending August 12, compared to the previous week’s 627,000-barrel draw. Distillate stocks saw a draw of 759,000 barrels for the week, compared to last week’s 1.376-million-barrel increase.

Daily Forecast

At 14:30 GMT, traders will get the opportunity to react to the latest inventories data from the Energy Information Administration (EIA). It is expected to show crude stocks fell about 300,000 barrels. A larger than expected draw in crude and gasoline could support the market.

Traders are also monitoring the developments surrounding the revived Iran Nuclear Deal. Basically they are waiting for a decision by Iran to accept or reject the new proposal from the European Union. Accepting the deal will allow more Iranian oil to hit global supply. Rejecting the deal could trigger a short-covering rally.