API reports deficit, while WTI awaits EIA report: call updated

Oil price has recovered sharply from last week’s slump, riding on risk affinity and rebels decline to ceasefire in Nigerian delta.

Key factors at play in Crude market –

• Goldman Sachs has called that crude recovery is over and price may once again drop lower.
• However, both OPEC and IEA have said that oil market is moving to a balance in second half of this year.
• Canada’s production is under recovery after wild fire shut down 1.8 million barrels/day.
• Nigeria and Venezuela still facing troubles with production and outages. Militants in Nigerian delta has declined to ceasefire.
• U.S. oil production has dropped to 8.74 million barrels/day and likely to drop further.
• Major supply increase is taking place from Middle East. Iran’s output rose 80,000 barrels/day in May to 3.84 million barrels/day. Saudi Arabia is expected to increase production to 11 million barrels/day.
• India has emerged as biggest incremental crude buyer this year.
• American Petroleum Institute’s (API) weekly report showed inventory declined by 5.2 million barrels.

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

Trade idea –

• WTI is trading at critical juncture where bears are fighting to push prices towards $40 per barrel and bulls are eyeing $60 per barrel. $52 level remains critical for both sides, which will mark the  break of one.