Oil Price Fundamental Daily Forecast – Supported by Drop in U.S. Stocks, Forties Outage

U.S. West Texas Intermediate and international-favored Brent crude oil futures rose, supported by a bullish weekly government inventories report and the continued shutdown of the North Sea Forties pipeline system.

On Wednesday, February WTI crude oil futures settled at $58.09, up $0.53 or +0.92% and March Brent crude oil futures closed at $64.11, up $0.71 or +1.12%.

According to the U.S. Energy Information Administration (EIA), U.S. crude oil stocks fell by 6.5 million barrels, more than expected, in the week to December 15, while gasoline stocks rose 1.2 million barrels, less than anticipated, even though refining activity rose.

Crude stocks, excluding the U.S. Strategic Petroleum Reserve, currently stand at 436.5 million barrels, the lowest since 2015.

The EIA also said that for the most recent week, refiner capacity utilization rose to 94.1 percent, the highest since the summer, and above average for December.

In other news, Kuwait’s oil minister Bakhit al-Rashidi said compliance among both OPEC and non-OPEC members currently stands at 122 percent, highest since the OPEC-led deal to cut production was implemented in January.

Forecast

The same factors continue to support crude oil prices early Thursday. At 0748 GMT, February WTI crude oil futures are trading $58.14, up $0.05 or +0.08% and March Brent crude oil is at $64.12, up $0.01 or +0.02%.

Brent crude oil prices are expected to be supported by the continuing outage of the U.K.’s Forties pipeline in the North Sea, which delivers crude. The latest estimates from operator Ineos call for repairs to last two to four weeks.

Although U.S. crude oil output is expected to break the all-time production record of more than 10 million bpd soon, inventories have been steadily declining in the United States due to strong export demand and efforts by major oil producers to restrict supply.

Unless traders decide to book profits ahead of the long holiday week-end, WTI and Brent prices are expected to be supported today.