Oil Price Fundamental Daily Forecast – Supported by API Draw, EIA Estimate Calling for 1.7m Barrel Decline

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are inching higher on Wednesday with lackluster volume ahead of today’s weekly government inventories report. Traders are saying the dollar-denominated asset is being underpinned by a weaker greenback, and the news that Britain approved another coronavirus vaccine.

At 11:02 GMT, February WTI crude oil futures are trading $48.41, up $0.41 or +0.85% and March Brent crude oil futures are at $51.60, up $0.37 or +0.72%.

Perhaps helping to put a lid on prices are continued concerns over coronavirus-related restrictions and their impact on fuel consumption. Also capping prices are dampened expectations for additional stimulus in the United States and worries over the upcoming OPEC+ summit, where the group is expected to stick with its plan to raise output by 500,000 barrels per day.

American Petroleum Institute Weekly Inventories Report

The API reported late Tuesday a draw in crude oil inventories of 4.785 million barrels for the week-ending December 25. Analysts were looking for a draw of 2.100 million barrels for the week.

The API also reported a draw in gasoline inventories of 718,000 barrels of gasoline for the week-ending December 25. Analysts had expected a 1.778-million-barrel build for the week.

Distillate inventories were down by 1.877 million barrels for the week, compared to last week’s 1.03-million-barrel increase, while Cushing inventories rose this week by 131,000 barrels.

Traders Preparing for OPEC+ Summit

While crude oil prices remain relatively high as investors continue to bet the rollout of the vaccines will speed up the global economic recovery and hence increase future demand, the higher prices likely mean that OPEC+ will go along with its plans to boost output by 500,000 barrels per day (bpd) in January and probably in February. We’ll find out what they are thinking when OPEC+ officials hold a summit on January 4.

Russia supports another increase of the same amount in February after the group slashed its production in 2020 to support slumping oil prices.

Meanwhile, the Saudi cabinet said it reviewed on Tuesday the results of a Saudi-Russian joint governmental committee meeting, in which the two countries reaffirmed commitment to the cooperation pact between petroleum producing countries and the declaration of the OPEC+ group to support the stability of global oil markets, a cabinet statement said.

EIA Inventories Report on Tap

The U.S. Energy Information Administration is scheduled to release its weekly inventories report for the week-ending December 25 at 15:30 GMT. The report is expected to show a 1.7 million barrel drawdown. It could come in larger than the estimate, given the API report.

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