Oil Price Fundamental Daily Forecast – Traders Looking for EIA Report to Show a Steady Crude Oil Draw

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher after early session weakness as traders prepare for the release of the U.S. government’s weekly inventories report later in the session.

Today’s early two-sided trade suggests the volatility is likely to continue over the near-term with bullish traders banking on increased vaccinations to stem worries over a drop in fuel demand, and bearish traders betting on a resurgence in coronavirus infections to dent demand.

This conflict was recently confirmed by comments from the International Energy Agency (IEA) and OPEC. Earlier in the month, the IEA forecast lower demand into the end of the year, while OPEC shrugged off concerns that the new rapidly spreading delta variant of the coronavirus would lead to a drop in demand.

At 13:15 GMT, October WTI crude oil is trading $67.76, up $0.22 or +0.33% and October Brent crude oil is at $71.48, up $0.43 or +0.61%.

Mexican Supply Issue Another Source of Potential Volatility

Earlier this week, crude oil prices were driven sharply higher as short-sellers aggressively covered positions after Mexican supply fell by more than 400,000 barrels per day following a fire on an oil platform. However, traders relaxed a little after Mexico’s state oil firm said it expected to resume production by August 30.

American Petroleum Institute Weekly Inventories

The American Petroleum Institute (API) on Tuesday reported a draw in crude oil inventories of 1.622 million barrels for the week ending August 20, bringing the total 2021 crude draw so far to more than 58 million barrels, using API data. Analysts were looking for a draw of about 2.367 million barrels for the week.

The API also reported a draw in gasoline inventories of 985,000 barrels for the week-ending August 20, compared to the previous week’s 1.1979-million-barrel draw.

Distillate stocks saw a decrease in inventories this week of 245,000 barrels for the week, compared to last week’s 502,000-barrel increase.

Meanwhile, on the support side, inventories at the Cushing, Oklahoma futures hub fell by 485,000 barrels, after last week’s 1.735-million-barrel decrease.

Daily Forecast

At 14:30 GMT, the U.S. Energy Administration (EIA) will release official inventories data. The report is expected to show a drawdown in crude stockpiles of 1.9 million barrels.

Traders, however, will be primarily focused on the gasoline inventories data since it will reveal signs of mobility demand destruction likely caused by the surge in coronavirus cases. Traders will also be looking for any signs of increased U.S. production after last Friday’s report from energy services firm Baker Hughes showed another rise in the number of oil rigs. Meanwhile, the government reported that U.S. oil production rose for the second week in a row to 11.4 million bpd, an increase of 100,000 bpd for the week.

POINT OF INTEREST:  It’s not too late to start planning for next week’s OPEC+ production level meeting. Given that OPEC hasn’t officially acknowledged a possibly drop in demand and that prices have stabilized this week after a seven day sell-off, most traders expect the group to follow-through with its plans to increase production slightly in September.