Oil Price Fundamental Daily Forecast – Sideways Until Release of API and EIA Data

Crude oil prices weakened on Tuesday as investors reacted negatively to signs of a resurgence in Libya’s output and on concerns that the OPEC-led production cuts may not be enough to trim the global supply glut.

U.S. July West Texas Intermediate crude oil settled the session at $49.66, down $0.14 or -0.28%. Benchmark August Brent crude oil closed at $52.24, down $0.27 or -0.51%.

According to a report from the chief of the state-run National Oil Corporation, Libya’s oil production was at 784,000 barrels per day (bpd) because of a technical issue at the Sharara field, but was expected to start rising to 800,000 bpd on Tuesday.

In other news, Goldman Sachs reduced their forecasts for oil prices, saying that falling U.S. production costs will keep supply rising for years to come. It based its forecast on the idea that once OPEC’s production growth resumes after its self-imposed production cuts in March 2018, U.S. and OPEC output would rise by 1 million to 1.3 million bpd between 2018 and 2020.

Forecast

The short-term charts suggest WTI and Brent crude will continue to trade in a range as traders continue to digest the impact of last week’s new production cut extension, Libya’s increased production and possible increased demand due to the start of the U.S. summer driving season.

While traders toss around the impact of these events, most of the real price action will be determined by how the market interprets the weekly and monthly supply and demand reports with most of the emphasis on total global oil inventory levels.

According to early estimates, U.S. crude oil inventories likely fell for the eighth straight week and refined product stockpiles were also forecast to have dropped last week.

Due to Monday’s Memorial Day holiday, weekly inventory reports from the private industry association, the American Petroleum Institute and the U.S. Energy Information Administration have been delayed to 2030 GMT on Wednesday and 1500 GMT on Thursday, respectively.