API reports surplus while the market awaits EIA report

North American oil benchmark, WTI is enjoying positive sentiment over the oil deal over the last few weeks. WTI is currently trading at $52.2 per barrel and Brent at $2.7 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.
• 10 Non-OPEC countries participated in a conference last Saturday in Vienna and concluded an oil deal, which would see their production being cut by 558,000 barrels per day.
• Russia will cut production by 300,000 barrels to 10.924 million barrels per day over the first half of next year, among which 200,000 barrels would be cut in the first quarter.
• 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 rose by 4.68 million barrels per day.

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.