API reports deficit while the market awaits EIA report

North American oil benchmark, WTI is enjoying positive sentiment over the OPEC deal, that was concluded last week. WTI is currently trading at $51.1 per barrel and Brent at $3 per barrel premium to WTI.

Key factors at play in crude oil market –

• OPEC members agreed last week to cut down production by 1.2 million barrels per day. The deal would come into effect from January next year.
• In addition to that, non-OPEC countries would cut production down by 0.6 million barrels per day, half of which would be cut by the Russian Federation.
• Global oil inventory now stands at 3.1 billion barrels.
• US production has been rising after bottoming in August to 8.4 million barrels. The current US production stands at 8.7 million barrels per day.
• API inventory report showed that crude inventory last week declined by 2.2 million barrels.

Today’s inventory report from US Energy Information Administration (EIA) will be released at 15:30 GMT. Trade idea –

• With a deal done, we expect the WTI to reach $54 per barrel and then extend the gains towards $59 per barrel.