Oil Price Fundamental Daily Forecast – Pressured by New Bearish EIA Projections, API Report Next
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures finished lower on Monday on renewed concerns over rising U.S. production and tight OPEC supply. Additionally, new government data showed speculators cut bets on oil, suggesting more selling could be seen over the near-term.
May WTI Crude Oil settled at $61.33, down $0.59 or -0.95% and June Brent Crude Oil finished the session at $64.79, down $0.48 or -0.74%.
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In other news, on Sunday, Iranian oil minister Bijan Zanganeh said OPEC could agree in June to begin easing current production curbs in 2019, the Wall Street Journal reported.
Also on Sunday, Saudi officials said they would be delaying the initial public offering of Saudi Aramco until 2019.
Forecast
Crude oil futures are trading lower early Tuesday, extending its losses from the previous session. Some of the pressure is coming from a recovery in the U.S. Dollar, which could affect foreign demand. Some is related to position-squaring ahead of today’s U.S. consumer inflation report, which could also impact the dollar and future demand for crude oil.
At 0820 GMT, May WTI Crude Oil is trading $61.19, down $0.14 or -0.23% and June Brent Crude Oil is at $64.65, down $0.14 or -0.22%.
Hours before late Tuesday’s American Petroleum Institute’s and Wednesday’s U.S. Energy Information Administration’s weekly inventories report, traders are eying a surge in U.S. production that could push inventories in the U.S. higher.
U.S. crude oil production soared past 10 million barrels per day (bpd) in late 2017, overtaking output by top exporter Saudi Arabia.
U.S. production is also expected to rise above 11 million bpd by late 2018, taking the top spot from Russia, according to the International Energy Agency (EIA).
Additionally, U.S. crude production from major shale formations is expected to rise by 131,000 bpd in April from the previous month to a record 6.95 million bpd, the U.S. Energy Information (EIA) said in a monthly report on Monday.
Oil prices fell with the release of this EIA report on Monday and it looks like the downside pressure will continue on Tuesday. We could see a slight reaction to the CPI data, but the overall trend is expected to be down unless the API report contains a surprise. Traders expect the API report to show another inventories build. Furthermore, the futures hub at Cushing, Oklahoma is also expected to show a build.