As of now, WTI is up more than 80% from its February low and still continuing. It is currently trading at $49 barrel, looking to challenge $50 psychological resistance. Focus is on OPEC meeting tomorrow.
Key factors at play in Crude market –
- OPEC members are meeting today in Vienna to discuss over strategies. Focus is on new oil minister of Saudi Arabia, Khalid al-Falih.
- Canada is recovering from Wildfire, which has led to shut down of 1.8 million barrels/day production in Alberta, Canada.
- Severe outages in Nigeria, Libya and production halt in Venezuela has taken out another 1.5 million barrels/day supply.
- U.S. oil production has dropped to 8.8 million barrels/day and likely to drop further.
- Major supply increase is taking place from Middle East. Iran boosted exports by 600,000 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 rose by 2.35 million barrels.
Today’s inventory report from US Energy Information Administration (EIA), to be released at 15:00 GMT.
Chart courtesy investing.com
Trade idea –
- We expect current rally to continue further, however oil price is likely to low over much longer horizon. Recent offshore pile up around Singapore, known as Singapore glut points to this direction.
- Price rise to $60/barrel, very much conceivable.
