- WTI remains on the back foot following Saudi Arabian optimism to restore production.
- The higher than previous API stock data add weakness to the quote.
- EIA data, trade/political headlines will provide fresh impulse.
Given the increase in API inventory data joining hands with the earlier price-negative news from the Middle East, WTI stays on the south-run while declining to $58.50 amid Wednesday morning in Asia.
Saudi Arabian Oil Minister’s comments offered initial set back to oil bulls while showing optimism to overcome the deadly drone attack, which knocked down 50% of its production, within few weeks rather than initially anticipated month’s of recovery. Adding to the bears’ favor could be the US President Donald Trump’s comments that he wants to avoid conflicts in this region.
Further to exert downside was the weekly US oil stocks data as per the private survey of the American Petroleum Institute (API) that marked an improvement from -7.2000 million barrels prior to +0.529 million barrels.
Trade/political headlines from the US-Japan and the US-China have been positive off-late with the White House Economic Adviser Larry Kudlow expecting strong US economic growth.
Crossing wires recently are comments from the Saudi Arabian Defence Ministry that is up for a press conference on Wednesday where it said to evidence of Iran’s involvement in the Aramco attacks.
In addition to the developments surrounding Saudi Arabia, weekly official stockpile data from the US Energy Information Administration (EIA) for the week ended on September 13 will also be observed closely. The inventory data may follow API’s footsteps with forecasts favoring -2.889 million barrels of a figure versus -6.912 million barrels being the previous readout.
It should also be noted that the clues of economic growth in the world’s largest economic and expectations of recession will also be on investors’ lookout during today’s Federal Reserve announcement.
FXStreet Analyst Ross J Burland expects the present downside play to continue while saying:
The market bounced hard on the fundamental weekend news which has thrown technicals off, but with the fundamentals now calming, technicals can come back into play and the downside is in play. The price surged to the vicinity of a 127.20% Fibonacci extension of the July swing highs to Aug swing lows but has since moved back, swiftly, to the 78.6% Fibo of the same range and prior Sep’ highs in the 58.50/70s. A break below there will open the 61.8% Fibo and Aug resistance just below the 57 handle. On a re-escalation of fundamentals, the April highs at 66.58 will be back in vouge.