Oil Price Fundamental Daily Forecast – Tightening Supply Continues to Outweigh Demand Concerns
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Friday, helped by better-than-expected trade balance data from China, which dampened concerns over a global economic slowdown. Prices also continue to be supported by the on-going OPEC-led supply cuts and the U.S. sanctions against Iran and Venezuela, which have helped tighten global supplies.
At 08:36 GMT, June WTI crude oil futures are trading $64.26, up $0.59 or +0.94% and June Brent crude oil futures are trading $71.37, up $0.54 or +0.76%.
Prices plunged on Thursday as traders continued to react to rising U.S. inventories. The price action, however, suggests the selling may have been fueled by technical factors. Furthermore, U.S. gasoline stocks fell by a whopping 7.7 million barrels last week. This was more than enough to offset the crude oil build.
In other news, earlier this week, the Energy Information Administration reported that U.S. crude inventories rose to their highest level since November 2017. Additionally, U.S. crude output remained at a record 12.2 million barrels per day. At the same time, the International Energy Agency (IEA) reported that OPEC production fell 550,000 bpd.
The IEA also said that U.S. sanctions and power outages pushed OPEC member Venezuela’s crude output to a long-term low of 870,000 bpd, even lower than OPEC had reported the day before.
Daily Forecast
Support is strong because supply is tightening. This is being supported by real supply data. Concerns over demand are just speculation. Earlier in the week, Bernstein Energy said in a note, “We believe global demand has another 10 million bpd of growth, with over half from China.”
June WTI crude oil is expected to continue to be supported fundamentally by the OPEC-led supply cuts and technically by a major Fibonacci level at $63.48. June Brent crude oil could explode to the upside if buyers can sustain a rally over $71.77.
This article was originally posted on FX Empire
