Markets

Crude Oil Price Outlook: Rising on Positive Fundamentals & Technicals

Crude Oil Price Outlook: Rising on Positive Fundamentals & Technicals

Supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and allies since January have been supporting prices.

Oil edged lower on Wednesday after a report showed a rise in US crude inventories, countering expectations of a tightening market in 2019 due to OPEC-led supply cuts and USA sanctions on Venezuela. Later in the year, it expects markets to remain fairly balanced due to a combination of waivers expiring for importers of Iranian oil, and because of a roll-over of the OPEC+ agreement into H2 2019.

"The weekly report from the EIA on USA oil stocks was bullish for outright prices, plain and simple", said Tamas Varga, an analyst at PVM Oil Associates Ltd.in London. "Moreover, lower oil prices - prices were between 14 percent and 18 percent lower in January than their 2018 average - are likely to stimulate economic activity and oil demand, particularly in emerging markets", said Jean-Pierre Durante, Head of Applied Research at Pictet Wealth Management.

Technically, the crude oil price remains within the rising channel in place on the chart throughout this year so far and its climb could well extend towards the channel resistance line, now around $56.30.

U.S. crude oil refinery inputs increased during the week ending February 1, the U.S. Energy Information Administration (EIA) said on Wednesday.

International Brent crude oil futures had yet to trade.

Brent crude oil futures were last down 12 cents at $62.57 a barrel by 1022 GMT, while US crude futures were down 7 cents at $53.94 a barrel. The global benchmark crude was at an $8.36 premium to WTI for the same month.




About a dozen tankers carrying over 7 million barrels of Venezuelan crude and products were anchored this week at the U.S Gulf Coast waiting for directions on how to pay for the cargoes following the sanctions, according to Refinitiv Eikon data.

OPEC oil supply fell in January by the largest amount in two years despite sluggish production declines from Russian Federation, according to a Reuters survey.

“With higher production from non-OPEC producers, especially the US, over the last few years, OPEC's market share has been shrinking, ” said James Williams, energy economist at WTRG Economics.

Meanwhile, U.S. sanctions against Venezuela's oil industry are expected to knock out at least 500,000 bpd of crude exports.

U.S. President Donald Trump said in his State of the Union address that a trade deal with China was possible.

Further gains in the price of United States crude oil are possible as the recovery that began in late December past year shows no sign of reversing just yet.


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