Oil Price Fundamental Daily Forecast – Traders Positioning Ahead of EIA Report, Tomorrow’s Trade Talks

The EIA will release its weekly inventories report at 14:30 GMT. Traders are looking for a 1.8 million barrel build.
James Hyerczyk
Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher on Wednesday, reversing earlier weakness. The intraday short-covering rally shortly before the regular session opening is being fueled by a report that China is ready to discuss a partial trade deal with the U.S. The move is also offsetting a report on Tuesday that showed a bigger-than-expected rise in stockpiles.

At 10:10 GMT, November WTI crude oil is at $53.13, up $0.50 or +0.99% and December Brent crude oil is at $58.80, up $0.56 or +0.96%.

American Petroleum Institute (API)

The API reported late Tuesday that weekly crude oil stockpiles rose 4.13 million barrels for the week-ending October 3. Analysts were looking for a 1.413-million-barrel build. The next draw for the year stands at 25.72 million barrels for the 41-week reporting period so far, according to the API data.

The API also reported a draw of 5.94 million barrels of gasoline for the week-ending October 3. Analysts were looking for a 257,000 barrel draw for the week.

Distillate inventories fell by 3.98 million barrels for the week, while inventories at Cushing rose by 1.24 million barrels.

Energy Information Administration Forecast

The EIA on Tuesday cut its 2020 world oil demand growth forecast by 100,000 barrels per day (bpd) to 1.30 million. The EIA also said U.S. crude production is expected to rise by 1.27 million bpd in 2019 to a record 12.26 million bpd, slightly above its previous forecast for a rise of 1.25 million.

International News

In Iraq, protests resumed overnight in Baghdad’s Sadr City district, though much of the country appeared quieter than it has been for a week.

Ecuador’s energy ministry said protests against austerity could reduce its oil output by 59,450 bpd.

Analysts are saying potential attacks by Turkey on Kurdish forces in northeast Syria could put pressure on Kurdistans economy and its oil production.

Saudi Arabia’s full oil production capacity will be recovered by the end of November, Saudi Aramco CEO Amin Nasser said at the Oil & Money Conference in London on Wednesday. The CEO also expressed his concern over an “absence of international resolve” against the perpetrators of the September 14 drone and missile attacks on Aramco facilities that forced the company to shut down half of its production and sent crude prices up nearly 20%.

Daily Forecast

The EIA will release its weekly inventories report at 14:30 GMT. Traders are looking for a 1.8 million barrel build.

Traders are also likely to respond to any news regarding trade relations between the United States and China. Although I don’t expect them to take a major position on either side ahead of Thursday’s start of two-day trade talks between the economic powerhouses.

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