API reports withdrawal while market awaits EIA report

Both Brent and WTI is heading higher as inventories decline and over geopolitical tensions in the Middle East. WTI is currently trading at $63.9 per barrel and Brent at $5.4 per barrel premium to WTI.

Key factors at play in crude oil market –

• Nigerian militants threatened to attack oil facilities within days.
• Iran successfully cracked down protests.
• Venezuela in crisis as parliament rules that Maduro’s $5.9 billion cryptocurrency issuance plan as illegal. U.S. Treasury warned investors that investing in Venezuelan cryptocurrencies might violate sanctions.
• EIA projects U.S. crude production to increase to 11. 4million barrels per day.
• President Trump recognized Jerusalem as Israel capital last week sparking tensions in the region.
• Turkey and Iran have taken a tough stance against the decision with latest Islamic summit over the issue taking place in Turkey.
• OPEC members and participating non-OPEC countries have agreed to extend the supply reduction agreement until the end of 2018.
• Saudi Crown Prince Mohammad bin-Salman led Corruption Committee arrested scores princes, scores of senior officials and incumbent ministers. One prince died in a shootout while resisting arrest.  The corruption Committee has seized billions of dollars’ worth of assets.
• According to Platts’ survey OPEC production at 32.85 million barrels per day, including Libya and Nigeria.
• OPEC production increased by 88,000 barrels/day in September after declining by 79,000 barrels per day m/min August, and that after an increase of 173,000 barrels per day in July. In June, production rose by 393,000 barrels per day in June compared to the previous month. In May production increased by 366,000 barrels per day.
• Current U.S production at 9.49 million barrels per day.
• The oil market is in backwardation, both Brent and WTI.
• API reported a large draw of 5.121 million barrels of crude oil. Gasoline saw a build of 4.338 million barrels.

Today’s inventory report from US Energy Information Administration (EIA) will be released at 16:00 GMT.

Trade idea –

• Active call - Buy Brent targeting $75 per barrel and WTI targeting $68 per barrel.

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