API reports build while market awaits EIA report

Both Brent and WTI is heading higher as inventories decline and over geopolitical tensions in the Middle East. WTI is currently trading at $64.6 per barrel and Brent at $5.2 per barrel premium to WTI.

Key factors at play in crude oil market –

• Nigerian militants attacked Sahara oil facilities and kidnapped worker.
• Iran successfully cracked down protests.
• Venezuela in crisis as parliament rules that Maduro’s $5.9 billion cryptocurrency issuance plan as illegal. U.S. Treasury warned investors that investing in Venezuelan cryptocurrencies might violate sanctions.
• EIA projects U.S. crude production to increase to 11. 4million barrels per day by end of 2019.
• President Trump recognized Jerusalem as Israel capital last week sparking tensions in the region.
• Turkey and Iran have taken a tough stance against the decision with latest Islamic summit over the issue taking place in Turkey.
• OPEC members and participating non-OPEC countries have agreed to extend the supply reduction agreement until the end of 2018.
• Saudi Crown Prince Mohammad bin-Salman led Corruption Committee arrested scores princes, scores of senior officials and incumbent ministers. One prince died in a shootout while resisting arrest.  The corruption Committee has seized billions of dollars’ worth of assets.
• OPEC production was 32.416 million barrels per day in December.
• OPEC production increased by 88,000 barrels/day in September after declining by 79,000 barrels per day m/min August, and that after an increase of 173,000 barrels per day in July. In June, production rose by 393,000 barrels per day in June compared to the previous month. In May production increased by 366,000 barrels per day.
• Current U.S production at 9.75 million barrels per day.
• The oil market is in backwardation, both Brent, and WTI.
• API reported a large build of 4.755 million barrels of crude oil. Gasoline saw a build of 1.782 million barrels.

Today’s inventory report from US Energy Information Administration (EIA) will be released at 15:30 GMT.

Trade idea –

• Active call - Buy Brent targeting $75 per barrel and WTI targeting $68 per barrel.

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