Oil Price Fundamental Daily Forecast – Weak Euro Zone Data Raising Concerns Over Demand

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower shortly before the regular session opening after weak manufacturing surveys in Europe raised concerns about the struggling Euro Zone economy. However, losses are being limited by a reported decline in U.S. inventories on Wednesday, ongoing OPEC-led production cuts, and U.S. sanctions against Iran and Venezuela.

At 10:15 GMT, June WTI crude oil is trading $63.78, down $0.09 or -0.13% and June Brent crude oil is at $71.57, down $0.05 or -0.07%.

Euro Zone PMI Raises Demand Worries

Activity in Germany’s manufacturing sector shrank for a fourth straight month in April, while a similar survey from France also painted a bleak picture.

U.S. Energy Information Administration Weekly Inventories

On Wednesday, the EIA reported that U.S. crude inventories fell by 1.4 million barrels in the week-ending April 12. Traders were looking for a 1.6 million barrel build. Gasoline stockpiles fell 1.2 million barrels during the same time period, while distillate fuel inventories fell by 362,000 barrels.

The EIA also reported a gasoline production rate of 9.9 million barrels daily last week and a distillate fuel production rate of 4.8 million barrels daily. This compares with 10.2 million bpd of gasoline for the prior week and 5 million bpd for distillate fuel. Refinery throughput averaged 16.1 million bpd last week.

Other News

U.S. imports dipped back towards the 6 million barrel per day mark while implied crude supply numbers remained firm.

Iran’s crude exports have dropped in April to their lowest daily level this year, suggesting a reduction in buyer interest ahead of expected further pressure from Washington.

U.S. crude oil output from seven major shale formations was expected to rise by about 80,000 bpd in May to a record 8.46 million bpd, the EIA said earlier in the week.

Daily Forecast

The markets could experience choppy, two-sided trading today due to thin, pre-holiday volume, and renewed concerns over future demand due to the weak Euro Zone PMI data. Earlier in the week some of those concerns were offset by stronger-than-expected economic data from China.

Concerns are also being raised over growing suspicion that OPEC and its allies including Russia will put an end to their strategy to cut production, trim the global excess inventories and stabilize prices in June instead of extending it into the second half of the year as Saudi Arabia desires.

Earlier in the week, Russia’s Finance Minister Anton Siluanov said that prices could drop as low as $40 a barrel if the OPEC-led deal ended early.