Oil Price Fundamental Daily Forecast – Traders Eyeing Tanker Delays off Turkey

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading nearly flat on Thursday and in an extremely tight range. The price action suggests investor indecision and impending volatility.

Oversold conditions could be to blame. The market could have run out of sellers because we are testing a major support area. It’s 50% to 61.8% of the contract range and a value zone.

At 09:11 GMT, January WTI crude oil futures are trading $72.65, up $0.64 or +0.89% and February Brent crude oil is at $77.64, up $0.47 or +0.61%. On Wednesday, the United States Oil Fund ETF (USO) settled at $63.67, down $1.56 or -2.39%.

Bearish Fundamentals Driving Prices into Value Zone

Fundamentally, traders are blaming this week’s sell-off on a surge in U.S. gasoline and distillate stockpiles. Fear of a recession and worries about Fed rate hikes are also weighing on sentiment. The week started on the wrong foot for bulls when OPEC+ decided not to cut output.

Uncertainty over how the Russian oil ban is expected to work could be another reason why traders are liquidating long oil positions.

Technically, the market has reached a value zone. Although prices could bounce higher after testing the area, bullish traders would prefer to see a solid support base form before the start of the next rally. They tend to last longer.

Tanker Issues Could Be Supportive

Reuters is reporting that Western officials are in talks with Turkish counterparts to resolve oil tanker queues off Turkey after the G7 and European Union rolled out new restrictions on Dec. 5 aimed at Russian oil exports. Their source is a British Treasury official.

“The UK, U.S. and EU are working closely with the Turkish government and the shipping and insurance industries to clarify the implementation of the Oil Price Cap and reach a resolution,” the official told Reuters.

“There is no reason for ships to be denied access to the Bosporus Straits for environmental or health and safety concerns.”

This is a potentially bullish development because it could prevent oil from reaching the market in a timely manner, leading to supply bottlenecks.

US Crude Stocks Decline; Fuel Stocks Post Large Builds – EIA

U.S. crude stocks fell in the latest week while gasoline and distillate inventories posted big builds, as oil refiners’ utilization climbed to the highest since 2019, the Energy Information Administration (EIA) said on Wednesday.

Short-Term Outlook

Mixed fundamentals could force traders to look at the technical picture. The markets are in a position to test key value areas at $72.31 to $63.73 for January WTI crude oil and $75.95 to $67.76 for February Brent crude oil.

Aggressive counter-trend traders could step in to stop the price slide on a test of these areas. They may even try to form a support base.

The catalyst that could put in the bottom are the tanker delays.