API reports deficit while the market awaits EIA report

WTI has been struggling to gain back lost grounds since its decline more than 9 percent a few weeks ago.  $52 resistance area is proving to be crucial for the WTI as of now. As expected the oil price formed a base around $46 area.

Key factors at play in crude oil market –

• Hard negotiations are already under way to decide whether the OPEC deal that expires in June should be extended or not when the members meet in Vienna on May 23rd.
• While Iran is still in compliance with the deal on an average monthly production basis, its production has gone up in February.
• February report shows that OPEC still remains in full compliance with the deal as a group but many members are yet to adhere to the agreed levels.
• Saudi Arabia could be bypassing the OPEC deal by increasing exports of refined products.
• US production rose from 8.428 million barrels in last July to 9.15 million barrels per day last week. This is the highest level of production since last year.  Payrolls are once again rising in the oil and gas sector according to ADP job numbers.
• The oil market is back in contango, currently at $0.64 per barrel.
• API reported a draw of 1.8 million barrels of crude oil.

Today’s inventory report from US Energy Information Administration (EIA) will be released at 14:30 GMT. Trade idea –

• We expect the WTI to extend gains towards $59 per barrel, and then towards $67 per barrel if the oil deal is extended.