Oil Price Fundamental Daily Forecast – Traders Showing Slightly Bearish Reaction to New OPEC+ Supply

U.S. West Texas Intermediate crude oil futures are edging lower early Monday, pressured by a mixed bag of fundamental news that is causing just enough uncertainty to encourage some light profit-taking following an eight day rally.

Ahead of today’s trade, the market was being supported by the notion that demand would outstrip supply as bullish traders increased bets that the current rate of vaccinations would outweigh any damage by the resurgent coronavirus.

At 11:09 GMT, September WTI crude oil futures are trading $72.65, down $1.30 or -1.76% and October Brent crude oil is at $74.38, down $1.03 or -1.37%.

The news over the weekend was mixed, but traders decided to react to the bearish story since it involved China.

Prices are under pressure on worries over China’s economy after a survey showed factory activity growing at its slowest pace in 17 months. However, this news was offset somewhat by comments from U.S. infectious disease expert Dr. Antony Fauci, who said on Sunday that the United States will not lock down again to curb COVID-19, but “things are going to get worse” as the Delta variant fuels a surge in cases.

In other offsetting news, a Reuters survey found that oil output from OPEC rose in July to its highest level since April 2020. However, that potentially bearish news was countered by a report that showed India’s daily gasoline consumption exceeded pre-pandemic levels last month as states relaxed COVID-19 lockdowns while gasoil sales were low, signaling subdued industrial activity in July.

US Oil & Gas Rig Count Falls for First Week in Eight – Baker Hughes

Energy services firm Baker Hughes Co announced on Friday that U.S. energy firms cut the number of oil and natural gas rigs operating for the first time in eight weeks, even though the rig count rose for 12 straight months, amid an industry stampede to reward investors with share buybacks instead of boosting production.

Daily Forecast

After an eight session rally, the market appears to be ripe for a near-term correction. As we said weeks ago, it is going to be hard to take out the July highs with more OPEC+ oil hitting the market in August to the tune of about 400,000 barrels per day.

Furthermore, although bullish investors believe that demand will eventually outstrip supply, that’s more of a longer-term forecast. Over the short-run an unstable recovery is likely to produce an unstable demand picture.

This may be enough to cap gains, but probably not enough to fuel a rapid sell-off. This will likely lead to a rangebound trade.

Our work suggests that WTI crude could retreat to $69.62 – $68.53 and Brent to $71.26 – $70.22 over the short-term.