Oil Price Fundamental Daily Forecast – Bloomberg Reporting U.S. Considering Drawing on Strategic Reserve
U.S. West Texas Intermediate and Brent crude oil futures are trading lower early Monday as worries over supply disruptions eased and Libyan ports resumed export activities. Traders are also watching for potential supply increases by Russia and other major oil producers.
At 0150 GMT, September WTI crude oil is trading $69.59, down $0.35 or -0.49 percent and September Brent crude oil is at $74.94, up $0.39 or -0.52 percent.
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The bullish news appears to be limited today in the wake of last week’s slew of potentially bearish events. Bullish thoughts are being driven by a warning from the International Energy Agency that spare capacity is dwindling, which could cause a shortage if there are any more meaningful supply disruptions. Also providing support are strikes in Norway and Iraq that drove up prices on Friday.
Traders don’t seem to be paying too much attention to the strikes because they probably believe this will be short-term events.
The first piece of bearish news this week is coming out of Libya where its state oil producer restarted output from a major oil field. Russia and other major oil producers may increase output further should supply shortages hit the global oil market, Russian Energy Minister Alexander Novak said on Friday.
Traders are also saying that an easing of trade tensions between the United States and China could actually be supportive for prices because it would reduce the possibility of Beijing placing tariffs on U.S. crude imports.
Over the week-end, the talk centered on a possible sale of U.S. oil reserves. This would definitely increase supply and weigh on prices. Currently, the United States holds a reserve of about 660 million barrels, and the Trump administration is considering drawing on the country’s oil reserve, according to a Bloomberg report.
Forecast
The trend is now down according to daily chart watchers. What this essentially means it that the sellers are in control and that they are likely to defend the trend by stopping rallies. It also means that they expected to continue to see bearish news that supports their position.
Although the strikes in Norway and Iraq are disrupting supply, this news is being offset by the restarting of Libyan production. This means that the IEA warning over storage capacity is the last piece of news holding up prices. This news could easily be offset if the U.S. decides to open its reserve spigot.