Oil Price Fundamental Daily Forecast – Trader Confidence in OPEC+ Underpinning Crude Oil Prices

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher on Wednesday, recovering from an early session setback. The price action suggests investors are buying into confidence shown by OPEC and its allies in a solid recovery in global fuel demand.

At 06:22 GMT, June WTI crude oil futures are trading $63.20, up $0.26 or +0.41% and July Brent crude oil is at $66.15, up $0.28 or +0.43%.

WTI and Brent crude oil futures were pressured earlier in the session by the rapid spread of COVID-19 infections in India that threaten the global demand recovery and a bigger-than-expected build in U.S. crude inventories.

Rising COVID-19 Cases Threatening Demand Recovery

The rapid spread of COVID-19 infections in India, the world’s third-largest oil consumer, Japan and Brazil cast doubt on near-term demand recovery and dampened market sentiment.

American Petroleum Institute Weekly Inventories Report

The API on Tuesday reported an extensive build in crude oil inventories of 4.319 million barrels for the week-ending April 23. Analysts were looking for a smaller build of 659,000 barrels for the week.

The API also reported a draw in gasoline inventories of 1.288 million barrels for the week-ending April 23. Analysts had expected a 508,000-barrel build for the week. Distillate stocks saw a decrease in inventories this week of 2.417 million barrels for the week.

OPEC+ Meeting Expectations

OPEC, Russia and their allies are expected to stick with plans for a phased easing of oil production restrictions from May to July amid upbeat forecasts for a recovery in global demand. That will bring 2.1 million bpd back to the market from May to July, easing cuts to 5.8 million bpd.

Daily Forecast

Oil prices could be trading higher despite the coronavirus surge in India and the unexpected rise in U.S. stockpiles because of trader confidence in OPEC and its allies.

On Tuesday, OPEC’s JTC meeting resulted in a cancellation of the regular ministerial meeting that was to be held on Wednesday with a recommendation for no changes to the May production quota for the group.

At 14:30 GMT, the U.S. Energy Information Administration, (EIA) will release its weekly inventories report. Traders are expecting the report to show a 900,000 barrel drawdown, but this could change given the API data.

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