Oil Price Fundamental Daily Forecast – Crude Rises after API Reports Bigger-Than-Expected Draw

U.S. West Texas Intermediate and international-benchmark crude oil prices rose slightly on Tuesday as investors continued to remain optimistic that the OPEC-led strategy to cut production, trim the global supply and stabilize prices would be extended beyond the March 2018 deadline to the end of the year.

December WTI crude oil settled at $54.38, up $0.23 or +0.42% and January Brent crude oil closed at $60.94, up $0.35 or +0.58%.

Dampening the bullish sentiment however were concerns over increasing U.S. exports and rising exports from Iraq. End-of-the-month position-squaring also limited the upside price action.

Forecast

Crude oil futures are trading higher on Wednesday. At 0752 GMT, WTI crude oil is trading $54.92, up $0.54 or +0.99% and Brent crude oil is at $61.33, up $0.39 or +0.64%.

Oil prices are being supported early Wednesday by overnight strength in Asia. The buying is being driven by a report from the American Petroleum Institute (API) that showed a bigger-than-expected decline in U.S. crude and gasoline inventories last week.

According to the API, crude supplies dropped 5.1 million barrels, gasoline stocks fell 7.7 million barrels and distillate inventories fell 3.1 million barrels during the week-ending October 27.

Analysts had expected a 1.4 million barrel draw in crude oil, a 2.5 million barrel draw in gasoline and a 2.5 million barrel draw in distillates.

Prices are likely to continue to receive support today because the API numbers have renewed faith in OPEC’s ability to rebalance the oil market.

The U.S. Energy Information Administration report on oil inventories is due to be released on Wednesday at 1430 GMT. It is expected to show a 1.5 million barrel draw although the estimate could change now that traders have seen the API data.