Oil Price Fundamental Daily Forecast – Trade Deal Optimism Offsetting Worries Over Supply

The direction of the markets on Thursday will be determined by whether traders decide that renewed optimism over trade relations is a bigger event than the rise in crude oil supplies. Keep in mind that the trade deal has long-term ramifications and the crude supply is a week-to-week situation.
James Hyerczyk
Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Thursday, recovering some of yesterday’s steep loss. The early session rally is being fueled by renewed optimism over a U.S.-China trade deal after the two economic powerhouses agreed to reduce tariffs. Despite the potentially bullish development, traders remain cautious over a potential delay in sealing the long-awaited interim trade deal and a huge increase of U.S. crude stockpiles.

At 09:53 GMT, December WTI crude oil is trading $57.05, up $0.70 or +1.26% and January Brent crude oil is at $62.54, up $0.80 or +1.30%.

Bearish News

WTI and Brent crude oil sold-off sharply on Wednesday after a report that a meeting between U.S. President Donald Trump and Chinese President Xi Jinping to sign an interim deal could be delayed until December as talks continue over terms and venue, a senior official of the Trump administration told Reuters on Wednesday.

It was still possible the “phase one” agreement aimed at ending a damaging trade war would not be reached, but a deal was more likely than not, the official said on condition of anonymity.

Crude oil was also pressured by the news that U.S. stockpiles rose 7.9 million barrels the week-ending November 1 as refiners cut output and exports fell, the Energy Information Administration (EIA) said on Wednesday. Traders were looking for an increase of 1.5 million barrels.

Helping to ease the pressure on prices was the news that gasoline and distillate inventories dropped 2.8 million barrels and by 622,000 barrels respectively.

Bullish News

WTI and Brent crude oil is trading higher on Wednesday, after China said the world’s two largest economies had agreed to remove existing trade tariffs.

Gao Feng, a ministry spokesperson for China’s Commerce Ministry, said that both sides had agreed to simultaneously cancel some existing tariffs on one another’s goods, according to the country’s state broadcaster.

The ministry spokesperson said that both sides were closer to a so-called “phase one” trade agreement following constructive negotiations over the past two weeks.

Daily Forecast

Expectations for a thaw in trade tensions have supported oil prices over the past several sessions along with expectations of deeper production cuts by OPEC and its allies. At the same time, gains have been limited by rising U.S. supply.

The direction of the markets on Thursday will be determined by whether traders decide that renewed optimism over trade relations is a bigger event than the rise in crude oil supplies. Keep in mind that the trade deal has long-term ramifications and the crude supply is a week-to-week situation.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US