Oil Price Fundamental Daily Forecast – ISM Manufacturing PMI Could Influence Price Action Today
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Friday with the OPEC-led production cuts continuing to fuel the rally. However, concerns continue to be raised over rising U.S. production, and a slowing global economy that could weigh on future demand. Nonetheless, the price action suggests that traders believe the oil markets are currently tightening.
At 09:13 GMT, April WTI crude oil is trading $57.59, up $0.37 or 0.65%. May Brent crude oil futures are trading $66.56, up $0.25 or +0.38%.
Signs of Tightening Supply Over Short-Run
OPEC and its allies continue to provide the most support with its production cuts of about 1.2 million barrels per day. The cuts are being further supported by the U.S.-led sanctions against Iran and Venezuela. New data shows Venezuelan oil exports have plunged by 40 percent to around 920,000 barrels per day (bpd) since the government slapped sanctions against its petroleum industry on January 28.
Despite the global supply being tighter than many anticipated for this time of year, there are signs that the market may become more amply supplied later in 2019.
This week, the U.S. Energy Information Administration (EIA) said U.S. crude output hit a record of more than 12 million bpd, driving exports to a record 3.6 million bpd in February. Additionally, the U.S. Energy Department said on Thursday it was offering up to 6 million barrels of crude from national emergency reserves to raise funds to modernize the U.S. strategic oil reserves.
Furthermore, investment bank RBC estimated that oil from the U.S. Gulf of Mexico port of Houston “can economically move anywhere globally when priced at a discount of $1.70 per barrel relative to the waterborne Brent benchmark”.
Demand Expected to Weaken This Year
A Reuters poll showed analysts expect global fuel demand to slow this year amid a broad economic slowdown. And current series of weak economic reports support this notion.
On Thursday, it was reported that China’s February factory activity fell for a third month. South Korea’s exports contracted at their steepest pace in nearly three years. In Japan, factory activity was also lower.
Today, all eyes will be on U.S. ISM Manufacturing PMI. It is expected to come in at 55.6, down from the previously reported 56.6.
This article was originally posted on FX Empire
