Oil Price Fundamental Daily Forecast – Traders Locked in On Dollar’s Movement

U.S. West Texas Intermediate and international-benchmark Brent crude oil are trading lower shortly before the regular session opening on Friday. A slightly better U.S. Dollar and pressure from concerns that rising U.S. oil production and exports will offset OPEC-led attempts to erode stockpiles with output curbs.

At 1158 GMT, April WTI Crude Oil is trading $62.57, down $0.19 or -0.30% and April Brent Crude Oil is at $66.11, down $0.28 or -0.39%.

According to the latest monthly data, U.S. oil production last week was a record 10.27 million barrels per day. Crude exports jumped to more than 2 million bpd, close to a record high of 2.1 million hit in October.

Yesterday, WTI and Brent crude oil surged 1.77% and 1.48% respectively after the U.S. Energy Information Administration reported that crude stocks fell unexpectedly by 1.6 million barrels. Analysts said low import figures contributed to the decline.

Oil was also supported by a weaker U.S. Dollar. A weaker dollar can make oil and other commodities denominated in the U.S. currency less expensive for foreign buyers.

Forecast

Despite Thursday’s price surge, WTI and Brent crude oil remain rangebound when looked at from a monthly perspective. Most of the renewed volatility in the markets can be blamed on the price action in the U.S. Dollar, which is being manipulated by rising U.S. interest rates. We should continue to see this effect today.

With the fundamental reports out of the way, look for a weaker U.S. Dollar to be supportive for crude oil today, and a stronger dollar to put a lid on any rallies.

With the U.S. pumping out a record amount of oil, the rally at the start of the year appears to be fading, leading to the current sideways trade. This is movement is likely to continue over the near-term because the rising U.S. production is undermining the OPEC-led plan to cut production, reduce global inventories and stabilize prices.

The range to watch for WTI crude is $61.95 to $62.91. Essentially, a bullish tone could develop over $62.91 and a bearish tone under $61.95.

Brent crude oil is currently straddling a pair of technical pivot prices at $66.03 and $65.89. Trader reaction to this area will set the tone today.