Oil market awaits EIA report:

The North American oil benchmark, WTI continues to struggle to gain grounds as the hopes of a freeze deal fade amid a high level of supplies and inventories.

Key factors at play in Crude market –

• Latest reports from the OPEC and the IEA warns on the increased supply with is likely to outstrip demand at least until mid of next year.
• Russia and Saudi Arabia has formed a joint working group to find ways to reduce oil market volatility.
• Global oil inventory now stands at 3.1 billion barrels. Since production goes down outside OPEC but grows inside, the total output is just 300,000 barrels per day less from last year’s level.
• OPEC members would meet informally later in the month on the sidelines of IEA summit.
• Recent research by Rystand Energy has revised US crude reserve upwards to 264 billion barrels, more than Saudi Arabia and Russia.
• U.S. oil production has dropped to 8.46 million barrels/day and likely to drop further. It has declined more than a million barrel from the peak but up from its low of 8.43 million barrels per day.
• Active oil rigs in the US have been climbing and up more than 25 percent from its bottom.
• API report showed that there has been a buildup in inventory in the tune of 1.4 million barrels.

Today’s inventory report from US Energy Information Administration (EIA) will be released at 14:30 GMT. The last report showed a drawdown of 14.5 million barrels but that was largely due to hurricane Hermine disrupting imports and production.

Trade idea –

• While the oil benchmarks benefit from a weaker dollar, but the real focus would be on the informal meeting the OPEC members would hold later this month in Algeria. A broad consensus might get reached, even if a production freeze deal is not reached.
• WTI is currently trading at $44.6 per barrel and the Brent at $2.2 per barrel premium.