Oil Price Fundamental Daily Forecast – Trade Deal Worries, Weak Chinese Factory Data Weighing on Demand

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging lower on Thursday as traders continue to react to inventory gains in yesterday’s government report, and renewed worries about whether the U.S. and China can reach a long-term trade deal. Weak factory data from China is also escalating concerns over global demand.

At 11:46 GMT, December WTI crude oil is at $54.54, down $0.53 or -0.94% and December Brent crude oil is at $60.39, down $0.22 or -0.36%.

U.S. Energy Information Administration Weekly Inventories Report

Crude oil inventories rose by 5.7 million barrels in the week to October 25, the U.S. Energy Information Administration (EIA) said on Wednesday, compared with analyst expectations for an increase of 494,000 barrels.

On Tuesday, the American Petroleum Institute (API) reported a decline of 708,000 barrels, raising hopes that official figures would also show a fall.

Crude stocks at the Cushing, Oklahoma futures delivery hub rose for a fourth straight week, gaining 1.6 million barrels last week, the EIA said.

However, gasoline and distillate inventories extended their declines even as refiners ramped up production, it said.

U.S.-China Trade Relations

Bloomberg News, citing unnamed sources, said that Chinese officials have been casting doubt over the possibility of a long-term trade deal with the U.S., despite the two sides closing in on an initial “phase one” accord. This headline is reviving concerns over future demand growth.

China Manufacturing Sector Weakens

China’s manufacturing sector continued to dwell in the doldrums in October, with sentiment among factory operators remaining in negative territory for the sixth month in row, the South China Morning Post reported on Thursday.

The manufacturing purchasing managers’ index (PMI), released by the National Bureau of Statistics (NBS) on Thursday, stood at 49.3 in October, down from 49.8 in September and below the expectation in a Bloomberg survey of analysts for an unchanged reading. The October figure was the lowest since hitting 49.2 in February.

Daily Forecast

WTI and Brent crude oil are taking a hit from worries over demand and supply on Thursday, suggesting that any rally today will be a labored event. Furthermore, investors are worried that Russia may not want to lower output along with OPEC and its other allies, raising questions over whether the group can continue to stabilize prices through its current series of production cuts.