Advertisement
Advertisement

Oil Price Fundamental Daily Forecast – GDP Over 4.1 Could Trigger Spike to Upside

By:
James Hyerczyk
Updated: Jul 27, 2018, 08:26 UTC

Traders will likely react to today’s U.S. second-quarter Gross Domestic Production report at 1230 GMT. It is expected to show the economy grew by 4.0%, up from 2.0%. Anything north of 4.0% could be bullish for prices because strong economic growth will mean greater demand for crude oil.

Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading slightly lower after posting three straight days of gains. Even with the small setback, the markets are set to finish the week higher with the U.S. futures contract posting nearly a 2.00 percent gain and the international favorite slightly better than 3.00 percent.

At 0735 GMT, September WTI crude oil futures are trading $69.47, down $0.13 or -0.20% and October Brent crude oil is at $75.05, down $0.07 or -0.09%.

Just about all of the news has been bullish this week. Helping to support prices is the bullish U.S. Energy Information Administration’s weekly inventories report, Saudi Arabia’s halt on transporting crude through a key shipping lane, and the easing of trade tensions between the United States and European Union.

Official U.S. data showed U.S. crude oil inventories last week declined more than expected to their lowest level since 2015 as exports climbed and stocks at the Cushing futures hub dropped.

Crude inventories fell 6.1 million barrels in the week-ending July 20, versus analyst expectations for a decrease of 2.3 million barrels, the U.S. Energy Information Administration said on Wednesday.

At 404.9 million barrels, inventories, not including the nation’s emergency petroleum reserve, were at their lowest level since February 2015.

According to reports, Saudi Arabia, the world’s biggest oil exporter, said on Thursday that it was “temporarily halting” all oil shipments through the strategic Red Sea lane of Bab al-Mandeb after an attack on two big oil tankers by Yemen’s Iran-aligned Houthi movement.

Saudi Energy Minister Khalid al-Falih said in a statement that the Houthis had attacked two Saudi Very Large Crude Carriers in the Red Sea on Wednesday morning, one of which sustained minimal damage.

“Saudi Arabia is temporarily halting all oil shipments through Bab al-Mandeb Strait immediately until the situation become clearer and the maritime transit Bab al-Mandeb is safe,” the minister said.

On Wednesday, U.S. President Donald Trump and Jean-Claude Juncker, president of the European Commission, the EU’s executive body, struck a surprise deal that ended the risk of an immediate trade war between the two powers.

Forecast

Traders will likely react to today’s U.S. second-quarter Gross Domestic Production report at 1230 GMT. It is expected to show the economy grew by 4.0%, up from 2.0%. Anything north of 4.0% could be bullish for prices because strong economic growth will mean greater demand for crude oil.

Looking at the daily chart, the Brent contract has resistance at $75.29 to $76.22. Overtaking the latter could spike prices higher.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

Did you find this article useful?

Advertisement