2017.03.2208:19:00UTC+00Api Reports Surplus While the Market Awaits Eia Report

WTI has been struggling since its decline more than 9 percent two weeks ago.  $50 resistance area is proving to be too much for the WTI as of now. We expect the oil price to form a base around $46 area.

Key factors at play in crude oil market –

• Hard negotiations are already under way to decide whether the OPEC deal that expires in June should be extended or not when the members meet in Vienna on May 23rd.
• While Iran is still in compliance with the deal on the average monthly production basis, its production has gone up in February.
• February report shows that OPEC still remains in full compliance with the deal as a group but many members are yet to adhere to the agreed levels. Iran’s production crossed the agreed level in February but the country is still in compliance based on average monthly production.
• Saudi Arabia could be bypassing the OPEC deal by increasing exports of refined products.
• US production rose from 8.428 million barrels in last July to 9.11 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 according to ADP job numbers.
• Some OPEC members are calling for no continuation of the deal when it expires in June.
• Oil market in backwardation, currently at $0.72 per barrel.
• API reported a surplus of 4.5 million barrels of crude oil.

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