WTI and Brent Crude Oil

Oil Price Fundamental Daily Forecast – Mixed Trade Ahead of EIA Report After 5-Day Rally

U.S. West Texas Intermediate and International-benchmark Brent crude oil futures are trading mixed on Wednesday on low holiday volume. The price action suggests traders are taking a breather after a five-day rally and could be ready to pack it in for the rest of the week following today’s U.S. government inventories report.

At 10:53 GMT, March WTI crude oil futures are trading $75.53, down $0.07 or -0.09% and March Brent crude oil is at $78.78, up $0.11 or +0.14%. On Tuesday, the United States Oil Fund ETF (USO) settled at $54.68, up $0.16 or +0.29%.

Despite today’s mixed performance, the markets remain underpinned by the optimistic outlook for the Omicron coronavirus variant that is sweeping around the world. The recent price action suggests traders believe that Omicron will have little effect on global demand even though U.S. airlines are actively canceling flights.

Supply concerns and a friendly private industry report are also helping to stabilize prices. Meanwhile, traders are saying they have already shifted their focus to the meeting between OPEC and its allies on January 4. In other news, the U.S. Energy Information Administration will release its weekly inventories report at 15:30 GMT. It is expected to show a drawdown in crude oil stockpiles.

Prices Underpinned by Supply Worries

Supply problems in Ecuador, Libya and Nigeria helped boost prices higher on Tuesday. The three producers declared forces majeures this month on part of their oil production because of maintenance issues and oilfield shutdowns.

American Petroleum Institute Weekly Inventories Report

Late Tuesday, the American Petroleum Institute (API) released its weekly inventories report for the week-ending December 24. It showed an estimated inventory draw of crude oil at 3.09 million barrels.

The API also reported a draw in gasoline inventories of 319,000 barrels for the same time period – after the previous week’s 3.701-million barrel build.

Distillate stocks saw a decrease in inventory of 716,000 barrels for the week, after last week’s 849,000-barrel decrease.

At the Cushing, Oklahoma futures hub, crude oil stockpiles rose 1.594 million-barrels for the week.

Early Guesses Have OPEC+ Sticking to Plans to Raise Production

Investors are looking forward to the OPEC+ meeting on January 4, at which the alliance is expected to decide to go along with its planned output hike of 400,000 barrels per day in February.

At its last meeting on December 2, OPEC and its allies stuck to its plans to boost output for January despite the breakout of Omicron. This news put in a major bottom in the market.

On Tuesday, Russian Deputy Prime Minister Alexander Novak, who is in charge of Moscow’s ties with the OPEC+ group of oil producers said, that the group has resisted calls from Washington to boost output because it wants to provide the market with clear guidance and not deviate from policy.

Today’s EIA report, due to be released at 15:30 GMT, is expected to show a 2.7 million barrel drawdown of crude oil for the week-ending December 24.

For a look at all of today’s economic events, check out our economic calendar.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.