Oil Price Fundamental Daily Forecast – Underpinned by Increased Appetite for Risk

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher early Tuesday, supported by upbeat comments from Chinese officials that suggest strong future demand and the OPEC-led production cuts. Gains are being capped by a weakening global economic outlook which suggests a slowdown for much of 2019.

At 1039 GMT, March WTI crude oil is trading $51.13, up $0.33 or +0.69% and March Brent crude oil is at $59.35, up $0.36 or +0.61%.

Traders are saying that positive headlines out of China are alleviating fears of an impending slowdown in the world’s second-largest economy.

Firstly, China’s National Development and Reform Commission (NDRC) said on Tuesday it would aim to achieve “a good start” for the economy in the first quarter, lifting hopes of further economic stimulus.

Secondly, Chinese Premier Li Keqiang said that the government was seeking to establish conditions to help meet its economic goals for 2019, Reuters reported, citing Chinese state television.

Meanwhile, traders are saying that despite the short-term weakness, crude oil prices are expected to remain underpinned by the OPEC-led production cuts.

Complicating matters and perhaps putting a lid on prices is increasing U.S. production which reached a record 11.7 million bpd late last year.

Forecast

The fundamentals are a little mixed today which could lead to higher prices, but an inside trading session. This occurs when price neither take out the previous days’ high nor the previous session’s low. This tends to indicate investor indecision.

If the news this week is not strong enough to take out last week’s highs then this will signal that buyers are looking for value. The best target zone for WTI crude oil is $48.14 to $46.85. For Brent crude oil, value buyers will likely step in on a test of $56.39 to $54.96.

Later today, investors will get the opportunity to react to the latest inventories data from the American Petroleum Institute. This report could cause a volatile reaction.