Oil Price Fundamental Daily Forecast – Light Trade Expected Ahead of Friday’s EIA Weekly Inventories Report

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading slightly better on Thursday shortly before the regular session opening. The early strength is being supported by a combination of thin-trading conditions, optimism over the U.S.-China trade deal, OPEC+ production cuts and expectations of a bullish number in Friday’s government inventories report after a private industry report showed a drawdown on Tuesday.

At 12:30 GMT, February WTI crude oil is trading $61.22, up $0.11 or +0.16% and March Brent crude oil is at $66.24, up $0.08 or +0.12%.

Thin Trading Conditions

Trading volume remains low due to the Christmas holidays, which have delayed the release of the U.S. government’s official oil inventory report by two days until Friday.

Optimism over U.S.-China Trade Deal

U.S. President Donald Trump provided some support for prices on Tuesday after he said he and Chinese President Xi Jinping would have a signing ceremony for the so-called Phase 1 agreement to end their trade dispute that was put together earlier this month.

OPEC+ Production Cuts

OPEC and its allies agreed in early December to extend and deepen production cuts that would remove as much as 2.1 million barrels per day (bpd) of supply off the market as of January 1, or roughly 2% of global demand.

American Petroleum Institute Weekly Inventories Report

U.S. crude oil stocks fell more than expected in the most recent week while gasoline and distillate inventories increased, data from industry group the American Petroleum Institute (API) showed Tuesday.

Crude inventories fell by 7.9 million barrels in the week to December 20 to 444.1 million barrels, compared with analysts’ expectations for a draw of 1.83 million barrels.

Crude stocks at the Cushing, Oklahoma, delivery hub fell by 2.2 million barrels, API said.

Refinery crude runs fell by 514,000 barrels per day, API data showed.

Gasoline stocks rose by 566,000 barrels, compared with analysts’ expectations in a Reuters poll for a 2-million-barrel gain.

Distillate fuel inventories, which include diesel and heating oil, rose by 1.68 million barrels, compared with expectations for an 867,000-barrel gain, the data showed.

U.S. crude imports fell last week by 331,000 barrels per day to 6.4 million bpd.

Daily Forecast

We’re not expecting too much movement today due to the holidays and a head of Friday’s official government inventories report. The U.S. Energy Information Administration (EIA) weekly inventories report is expected to show a 1.7 million barrel draw down for the week-ending December 20.