As forecasted, WTI is likely to head towards the target of $35 per barrel. WTI is currently trading at $42.7 per barrel.

Key factors at play in Crude market

• OPEC countries have announced an informal meeting in late September when on the sideline of IEA biennial summit in Algeria.
• 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 8.46 million barrels/day and likely to drop further. It has declined by almost a million barrel from the peak.
• Watch out for the supply increase from Saudi Arabia, Russia, and Iran.
• India has emerged as the biggest incremental crude buyer this year.
• American Petroleum Institute’s (API) weekly report showed the biggest inventory buildup in three months. Inventory increased by 2.09 million barrels. Gasoline stocks rose by 3.9 million barrels.

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

Trade idea

• The OPEC meeting announcement has provided some boost to the oil price, however, we don’t expect the current rally to extend beyond $45 per barrel and price is more likely to drift towards $35 per barrel area.