Oil Price Fundamental Daily Forecast – Weaker Dollar, Stronger Demand, Rig Slowdown Supporting Prices

U.S. West Texas Intermediate and international-benchmark Brent crude oil are inching higher early Monday with buyers being encouraged by a slowdown in new producing rigs and developing signs of stronger demand.

At 0545 GMT, September WTI crude oil is trading $46.86, up $0.11 or +0.24% and October Brent crude oil is trading $49.32, up $0.15 or +0.31%.

Last week’s strong draw on inventories as reported by the U.S. Energy Information Administration and positive comments from the International Energy Administration are helping to underpin the markets which find themselves gaining upside momentum, putting the WTI futures contract in a position to challenge the July 5 top at $47.45 and the Brent futures contract to test its July 5 top at $50.11.

In other news, U.S. drillers added two oil rigs in the week to July 14, bringing the total count up to 765, according to energy services firm Baker Hughes. Although the number of rigs is at its highest level since April 2015, there is a sign of a slowdown. Rig additions over the past four weeks averaged five, the lowest since November 2016.

Forecast

Upside momentum is building which could be helped today if the U.S. Dollar continues to weaken. The charts indicate a potential drive to at least $49.01 for WTI crude by the end of the week if we continue the bullish pace.

Traders should continue to watch out for two-sided reports like we saw last week, but that traders seemed to shrug off. Traders aren’t paying too much attention to the longer-term protections but focusing at this time on U.S. production and the pace of the rig count additions.