Oil Price Fundamental Daily Forecast – Traders Looking for Direction from API, EIA Data

U.S. West Texas Intermediate and international-benchmark crude oil futures are trading lower early Monday. Volume continues to be relatively low ahead of the last trading day of the month. And speaking of the end of the month, Brent futures are in a position to post their biggest monthly loss in two years.

At 0640 GMT, September WTI crude oil is trading $69.80, down $0.31 or -0.46% and October Brent crude oil is at $75.30, down $0.25 or -0.33%.

The main concern for traders early Tuesday is oversupply. This comes on the heels of a report which showed OPEC’s output in July rose to its highest for 2018.

According to a Reuters survey, OPEC increased production in July. The report shows that the cartel hiked production by 70,000 barrels per day (bpd) to 32.64 million bpd, the most this year.

In other news, U.S. President Donald Trump appeared to soften his approach to Iran, saying on Monday he would meet with President Hassan Rouhani without any preconditions. Remember that it was only a week ago that he threatened on Twitter to unleash severe consequences on Iran. If this in some way led to a softer stance on Iranian exports then prices could weaken.

Currently, the United States remains firm on its plan to cut Iranian exports to zero under the sanctions it pledged to reintroduce in May.

Additionally, the market is being supported by Saudi Arabia’s shutdown of a key waterway.

Forecast

Losses could be limited on Tuesday because ahead of the regular trading session, investors are already looking for support from this week’s American Petroleum Institute and U.S. Energy Information Administration’s weekly inventory reports.

Early estimates are calling for the API and EIA reports to show a drawdown of about 3.2 million barrels during the week-ended July 27.

Perhaps limiting gains, however, may be a report from energy information company Genscape that showed inventories at Cushing, Oklahoma, the WTI futures hub, rose almost 200,000 barrels, or nearly 1 percent, from Tuesday to Friday last week, according to traders.

The daily chart supports the idea of a balanced market. However, this could change with the API and EIA data. Basically, look for an upside bias to develop on a sustained move over $70.42 and for a downside bias to develop on a sustained move under $69.64.