API reports draw while market awaits EIA report

Both Brent and WTI is heading lower as U.S. shale production continues to beat the estimate. WTI is currently trading at $63 per barrel and Brent at $3.7 per barrel premium to WTI.

Key factors at play in crude oil market –

• OPEC and Russia to cooperate on oil production beyond 2018.
• Nigerian militants attacked Sahara oil facilities and kidnapped worker.
• 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 month 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 corruption crackdown yielded $106 billion according to the country’s attorney general.
• OPEC production was 32.416 million barrels per day in December.
• Current U.S production at 9.92 million barrels per day.
• The oil market is in backwardation, both Brent, and WTI.
• API reported a surprise draw of 1.05 million barrels of crude oil. Gasoline saw a build of 2.692 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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