2017.04.2609:42:00UTC+00Api Reports Deficit While the Market Awaits Eia Report

WTI recovered from the slump of $47 per barrel, as it found support in the recent rise in geopolitical tensions in the Middle East. Earlier this month, the US President Donald Trump launched missile strikes on Syria in response to the alleged use of chemical weapons by the Assad government and launched the biggest non-nuclear bomb in Afghanistan. However, as the tensions ease in the Korean peninsula and the production continued to rise in the United States, WTI has fallen below $50 per barrel. WTI is now slowly grinding lower, along with the Brent. WTI is currently trading at $49.1 per barrel and Brent at $2.5 per barrel premium.

Key factors at play in crude oil market –

• Iraq plans to increase production to 5 million barrels per day in 2017. The country remains a hurdle to the extension of OPEC deal.
• Despite the strike in Syria, the US and Russia seems to be converging on the geopolitical front.
• 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.
• March 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.
• US production rose from 8.428 million barrels in last July to 9.252 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.
• The oil market is back in backwardation, currently at $0.42 per barrel.
• API reported a draw of 1.6 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 decline towards $43 per barrel in the short term.