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

As forecasted, WTI is heading towards target of $35 per barrel.

Key factors at play in Crude market –

• Oil market glut has shifted from crude oil to gasoline. According to latest IEA report, crude market is closer to balance but product stocks are very high and may work against price stability. US weekly gasoline inventory (12 week average) has risen to 239 million barrels.
• 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 8.51 million barrels/day and likely to drop further. It has declined by almost a million barrel from the peak.
• Watch out the supply from Saudi Arabia, Russia, and Iran.
• India has emerged as biggest incremental crude buyer this year.
• American Petroleum Institute’s (API) weekly report showed the drop in oil inventory by 1.3 million barrels.

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

Trade idea –

• Bears have taken control of the WTI and we expect the price to decline as low as $35 per barrel. WTI is currently trading at $39.7 per barrel. Key supports are at $35 and resistance at $42.5 per barrel.