API reports surplus while the market awaits EIA report

WTI continues to struggle trapped within the force of OPEC deal exerting positive impact and continued increase in the US oil production. WTI is currently trading at $54.3 per barrel and Brent at $2.6 per barrel premium to WTI.

Key factors at play in crude oil market –

• Saudi Arabia could be bypassing the OPEC deal by increasing exports of refined products.
• OPEC is in almost full compliance with the production cuts. In January, the compliance was at 92 percent.
• US production rose from 8.428 million barrels in last July to 9.001 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.
• Some OPEC members are calling for no continuation of the deal, when it expires in June.
• Contango is back in the oil market. The contango is currently at 27 cents.
• API reported a surplus of 2.5 million barrels of crude oil.

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

• We expect the WTI to extend gains towards $59 per barrel, and then towards $67 per barrel. However, a decline towards $46 per barrel in the short term can’t be ruled out. We don’t suspect the oil price to break below $42 stop loss area for the long call.