Oil Price Fundamental Daily Forecast – EIA Expected to Report Small Inventory Build

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading mixed on Wednesday shortly before the regular session opening and release of the latest government inventories data. Overnight prices are posting a two-sided trade on relatively light volume as traders digest the latest private industry inventory numbers and U.S.-China trade talk progress.

At 10:05 GMT, December WTI crude oil is trading $55.44, down $0.08 or -0.15% and December Brent crude oil is at $61.60, up $0.02 or +0.02%.

American Petroleum Institute Weekly Inventories Report

Late Tuesday, the API reported a small crude oil inventory build of 592,000 barrels for the week-ending October 24. This was only slightly below the 729,000-barrel build forecast.

After today’s inventory move, the net draw for the year is now dwindling at 10.23 million barrels for the 44-week reporting period so far, using API data.

The API also reported a build of 1.599 million barrels of gasoline for the week-ending October 24. Analysts predicted a draw in gasoline inventories of 2.333 million barrels for the week.

Distillate inventories grew by 1.998 million barrels for the week, while inventories at the Cushing, Oklahoma futures hub fell by 846,000 million barrels.

OPEC, Russia and Output Cut Increase

Some of the selling pressure Tuesday may have been caused by conflicting reports that Saudi Arabia is willing to cut deeper at the December OPEC meeting, while Russia continues to suggest indirectly that it might not be interested in doing more.

Fading Trade Deal Concerns Weighing on Prices

Trade deal risks are rising slightly due to fading optimism over a U.S.-China phase-one deal. According to reports, the United States and China were continuing to grind out an interim trade agreement, but it may not be completed in time for U.S. and Chinese officials to sign it next month, a U.S. administration official said.

Daily Forecast

Today’s U.S. Energy Information Administration (EIA) weekly inventories report, due to be released at 14:30 GMT, is expected to show a 500,000 barrel build. Last week, the government reported an unexpected 1.7 million barrel draw down.

The Federal Reserve is also expected to cut its benchmark interest rate 25 basis points. It may also signal that it will take a pause in December and may make one more cut next year.

Advance GDP is expected to come in at 1.6%, below the previously revised lower 2.0%.

The report that a trade deal may not be signed next month should not be a big deal for oil traders. Calling off the negotiations would be a big deal.

If you recall, on October 21, U.S. Commerce Secretary Wilbur Ross said the initial trade deal does not need to be finalized next month.

“It has to be the right deal, and it doesn’t have to be in November,” Ross told Fox Business Network in a television interview. “It’s more critical that it be a proper deal that exactly when it occurs.”

He went on to say, “The key thing is to get everything right that we do sign. That’s the important element. That’s what the president is wedded to do.”

“Whether it’s this day or that day might be interesting to the media, but it isn’t the real game,” Ross said.

Russia not agreeing with OPEC and its other allies on extended production cuts at the December 5-6 meeting is important. Pay attention to that story.