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Oil Price Fundamental Daily Forecast – EIA Report Indicates Crude Bearish, Products Bullish

James Hyerczyk
FX Empire

U.S. West Texas intermediate and international benchmark Brent crude oil posted a wicked two-sided trade on Wednesday as investors reacted to a surprise government report.

January WTI crude oil settled at $57.05, down $0.38 or -0.66% and February Brent crude oil finished the session at $63.28, down $0.19 or -0.30%.

Daily February Brent Crude

According to the U.S. Energy Information Administration, U.S. crude oil stockpiles rose unexpectedly during the week-ending November 3. The move was fueled by a jump in imports and a plunge in exports. U.S. production also hit its highest level since at least 1983.

Crude inventories rose 2.2 million barrels versus estimates for a 2.9 million barrel draw down. Gasoline and distillate inventories fell to multi-year lows, even as refining rates rose.

Gasoline stocks fell 3.3 million barrels to 209.5 million barrels, their lowest since November 2014. Traders were looking for a 1.9 million barrel draw down.

Distillate stockpiles, which include diesel and heating oil, fell 3.4 million barrels, more than double expectations for a 1.4 million-barrel drop, the EIA data showed. At 125.6 million barrels, nationwide distillate inventories were at their lowest since February 2014.

The EIA also said domestic crude production rose 67,000 barrels per day to 9.62 million bpd.

Daily January WTI Crude Oil


WTI and Brent futures are trading flat early in the session on Thursday. Technical and Fundamental factors could influence the price action today.

Technically, both markets posted a potentially bearish closing price reversal top. The chart pattern doesn’t mean the trend is getting ready to change to down, but it may be the first indication that the selling is greater than the buying at current price levels.

On the WTI chart, a trade through $56.65 will confirm the chart pattern. If the move gains traction then we could see a 2 to 3 break into a retracement zone at $54.62 to $53.78.

On the Brent chart, a move through $62.78 will confirm the reversal top. If this creates enough downside momentum then $60.36 to $59.40 will be the primary downside target.

The crude oil portion of the EIA report was bearish, but the product components were bullish. The mixed report combined with the technically overbought market may give investors an excuse to take profits and re-enter at more favorable price levels.

This article was originally posted on FX Empire



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