Oil Price Fundamental Daily Forecast – Rising Production, Trade Dispute Fears Likely to Continue to Weigh on Prices

Profit-taking and position-squaring is helping to boost U.S. West Texas Intermediate and international-benchmark Brent crude oil futures early Thursday after two days of heavy selling pressure. However, the move isn’t convincing enough to chase the bulk of the short-sellers out of the market, who may be banking on mounting concerns over trade friction between the U.S. and China to drive prices lower.

At 0721 GMT, September WTI crude oil is trading $67.67, up $0.01 or +0.01% and October Brent crude oil is at $72.62, up $0.23 or +0.30%.

Crude oil futures were driven sharply lower on Wednesday after the U.S. Energy Information Administration said U.S. crude inventories rose 3.8 million barrels the week-ending July 27 as imports jumped. Analysts were looking for a decline of 2.8 million barrels.

There were some bullish elements in the report, which may have been enough to slow down the selling. Gasoline stocks declined by 2.5 million barrels and crude stocks at the Cushing, Oklahoma, futures delivery hub for WTI crude oil, dropped by 1.3 million barrels, according to the EIA.

Forecast

Technical factors may play a role in today’s price action with WTI futures testing a potential support area at $67.99 to $66.81. We could see increased short-covering on a sustained move over $67.99 and a potential acceleration to the downside under $66.81.

As for Brent futures, the early April to late May range is $65.29 to $79.37. Currently, the October futures contract is testing its 50% level at $72.33. Its 61.8% level is $70.67. This zone is controlling the longer-term direction of the futures contract.

Also today, traders will continue to monitor the escalating trade dispute between the United States and China. They’ll be looking to see how China responds, if at all, to the latest round of threats from the Trump administration.

So far the impact of the trade dispute hasn’t shown up in U.S. economic data so the reaction in the crude oil market has been diminished. However, the weakness does indicate that investors are becoming concerns especially during this period of increased production.

Last month Iraq exported 3.543 million barrels per day of crude from its southern ports, above the June average, the oil ministry said on Wednesday.

Russian oil minister Alexander Novak said that higher production was needed to maintain the market’s stability. This after his department announced above average production in July.