Oil Price Fundamental Daily Forecast – Supported by Position-Squaring, Weaker Dollar

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher early Friday after shrugging off earlier weakness. Position-squaring and a weaker U.S. Dollar may be contributing to the positive price action.

At 0813 GMT, October WTI crude oil futures are trading at $65.08, up $0.20 or +0.31% and October Brent crude oil is at $71.71, up $0.28 or +0.39%.

Despite today’s early strength, crude oil is heading for a third straight weekly decline and its sixth out of seven weeks amid increasing concerns about slowing global economic growth that could hit demand for petroleum products.

Additional bearish factors include data released earlier this week showing a large build in U.S. inventories. The crisis in Turkey also contributed to the weakness by driving up demand for the U.S. Dollar. This lead to a broad sell-off in dollar-denominated commodities including crude oil.

Traders are also concerned about the impact of the U.S. tariffs on China. Asian demand is showing signs of slowing down as trade disputes and a stronger dollar drag the economies of some of the world’s largest oil buyers.

The news that the U.S. and China will renew trade talks in late August may provide enough optimism to fuel a short-covering rally back into resistance, but without a permanent solution to the trade dispute, this rally is likely to be met with fresh selling pressure.

At this time, the fundamentals are bearish so it’s probably going to take a supply disruption to drive prices sharply higher.