Oil Fundamental Forecast March 2, 2017
Crude oil prices traded mostly sideways on Wednesday after buyers failed to support an attempted breakout to the upside. Capping the market was a reported rise in crude inventories to a new record high.
U.S. April West Texas Intermediate crude oil futures finished the session at $53.83, down $0.18 or -0.33%. International Brent crude oil closed at $56.36, down $0.15 or -0.27%.
The range was tight after the release of the weekly U.S. Energy Information Administration report. The EIA report contained few surprises.
According to the EIA, U.S. crude stockpiles rose 1.5 million barrels the week-ended February 24, in line with expectations. A new record high was also set at 520.2 million barrels.
Continue to look for crude oil to remain in its $5.00 range, established over the past two months. Sentiment in the oil market remains balanced between growing inventories in the U.S. and rising output from U.S. shale producers, and the hopes that somehow OPEC’s plan to cut production will eventually start to trim the global supply glut.
According to government and exchange data, hedge and commodity funds remained locked-in on the long side at record levels, however, all this has been able to do is support the market on price dips. Even bullish traders seem reluctant seem hesitant to buy strength in an effort to take out the resistance.
According to Reuters, OPEC compliance is up to about 94%. This news came out on Tuesday and had very little impact on prices. This tells me that it is going to take a surprise to move this market out of the range.
A rising dollar appears to have already been priced into the market so I have to believe that the news that will trigger a breakout to the upside will be something like the announcement of increased production cuts from the Russians.
Without a surprise event, we’re likely to remain rangebound.