Though it has been gaining some ground WTI has been hit pretty hard this week. $50 per barrel is posing as major resistance since the UK referendum.
Key factors at play in Crude market –
- According to latest IEA report, crude market is closer to balance but product stocks are very high and may work against price stability.
- Recent research by Rystand Energy has revised US crude reserve upwards to 264 billion barrels, more than Saudi Arabia and Russia.
- Goldman Sachs has called that crude recovery is over and price may once again drop lower.
- Canada’s production is under recovery after the wild fire shut down 1.8 million barrels/day.
- Nigeria and Venezuela still facing troubles with production and outages. Militants in Nigerian delta has declined to a ceasefire.
- U.S. oil production has dropped to 8.62 million barrels/day and likely to drop further.
- Major supply increase is taking place from the Middle East. Iran’s output rose 80,000 barrels/day in May to 3.84 million barrels/day. Saudi Arabia is expected to increase production to 11 million barrels/day.
- India has emerged as the biggest incremental crude buyer this year.
- American Petroleum Institute’s (API) weekly report showed the biggest rise in inventory in 10 weeks by 2.2 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.
