API reports draw while market awaits EIA report

Both Brent and WTI is correcting as U.S. shale production continues to beat the estimate. WTI is currently trading at $61 per barrel and Brent at $3.9 per barrel premium to WTI.

Key factors at play in crude oil market –

• OPEC and Russia to cooperate on oil production beyond 2018.
• OPEC is reportedly working on an agreement which would make Russia a permanent partner of OPEC in oil supply management with OPEC
• Venezuela in crisis as oil production declined to 1.6 million barrels per day.
• EIA projects U.S. crude production to increase to 11. 4million barrels per day by end of 2019.
• 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 32.46 million barrels per day in January.
• Current U.S production at 10.27 million barrels per day.
• The oil market is in backwardation, for both the Brent, and WTI.
• API reported a surprise draw of 0.91 million barrels of crude oil. Gasoline saw a build of 1.468 million barrels.

Today’s inventory report from US Energy Information Administration (EIA) will be released at 16:00 GMT.

Trade idea –

• Active call - Brent short-term target reached $62 per barrel. WTI target reached $61 per barrel.

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