API reports build while the market awaits EIA report

Oil price is riding higher on Saudi Arabia’s pledge to cut exports at the review meeting in St. Petersburg Russia and as API have reported huge draw in inventories in the past few weeks. WTI is currently trading at $49.2 per barrel; and Brent at $2.7 per barrel premium.

Key factors at play in crude oil market –

• Tensions in the Middle East continues with Qatar blockade.
• Saudi Arabia pledged to reduce exports by a million barrels per day.
• Nigeria voluntarily agreed to a production cap of 1.8 million barrels per day.
• Venezuela is suffering a major political crisis, which could see a sharp drop in supplies from Venezuela that is close to 2 million barrels.
• The United States sanctioned Maduro of Venezuela but negative for oil and didn’t sanction the countries’ exports.
• Ecuador to become the first country to shy away from the OPEC agreement. Will increase production gradually.
• OPEC production increased by 393,000 barrels per day in June compared to the previous month. In May production increased by 366,000 barrels per day.
• Libyan production reportedly touched 1 million barrels per day in July.
• June report shows that OPEC still remains in full compliance on an average with the deal as a group but many members are yet to adhere to the agreed levels.
• The US production stands at 9.41 million barrels per day.
• The oil market is back in backwardation, currently at $0.04 per barrel.
• API reported a build of 1.78 million barrels of crude oil.

Today’s inventory report from US Energy Information Administration (EIA) will be released at 14:30 GMT.

Trade idea –

• Short term oil outlook changed. Buy WTI targeting $56 per barrel. Brent is likely to reach $59 per barrel.

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