- WTI stuck in a tight range awaiting market noise developments for direction.
- Currently, WTI trades at 52.86 and is anchored below 200-HR EMA.
Oil prices overnight were displaying ranges below recent their ATR as traders and investors weighed the uncertainties surrounding a supply decision from OPEC+ ahead of supply data yesterday and form later today.
With the OPEC meeting coming up on June 25 and 26, while hardly a surprise, considering oversupply issues in the oil market and a need to act to stem a sell-off in the price, and not to mention all of the comments of late from Saudi Arabia’s own oil minister, Khalid Al-Falih, the UAE Energy Minister said today that OPEC+ is close to reaching an agreement on extending production cuts:
- Says current oil inventories suggest curbs should remain in place.
- OPEC’s production deal should remain or be extended ‘at least until the end of the year’.
Meanwhile, ahead of the official US government data, a private survey showed a build in inventory, a surprise compared to a Reuters survey that predicted a 500,000-barrel drawdown:
Crude inventories:
- Crude: +4.85M
- Gasoline: +830K
- Distillates: -3.5M
On the same day, the Energy Information Administration reduced this year’s forecast for prices and U.S. crude-oil production in its Short-term Energy Outlook report. The EIA forecasts 2019 domestic crude production of 12.32 million barrels a day, down 1% from the May forecast, while cutting its 2020 output view by 0.9% to 13.26 million barrels a day.
Later today, the weekly U.S. petroleum supply figures will come from the EIA where a slight rise of 80,000 barrels in crude supplies for the week ended June 7 are expected. We then get the monthly oil reports from OPEC and the International Energy Agency released on Thursday and Friday, respectively where the IEA’s report will include forecasts for 2020.
Meanwhile, analysts at TD Securities argued that energy markets are taking well to the latest increase in risk appetite with CTAs bringing WTI selling to a halt, and are set to cover a large portion of their shorts if today’s gain can be held:
“Indeed, comments from Novak yesterday that Russia is worried about oversupply and potentially $40/bbl oil in the second half of the year has further strengthened our view that OPEC+ will agree on an extension to their production cuts. Meanwhile, global supply remains at risks amid the recent restriction of the flow of diluents to Venezuela, along with sky-high risks to Libya’s output and boiling tensions in the Gulf, suggesting fundamental support remains. In addition, CTAs continue to hold divergent trades in product markets as they sell gasoline and buy heating oil, which is a trade we like amid the coming IMO regulations which could substantially tighten the distillate market at the expense of gasoline in the later months of the year.”
WTI levels
WTI technical analysis: Capped at hourly 200HR EMA and channel resistance
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