Crude: Rebalancing or simply still bearish?
Crude oil prices are once again drifting lower after the API reported another huge build in crude oil stocks late Tuesday afternoon. The API reported a 6.3 million barrels build for the seventh weekly build in a row of builds even as the U.S. refining sector continues to increase refinery utilization rates as they return from the fall maintenance season.
With the EIA inventory snapshot not due out until 11 a.m. EST on Thursday, the API data release may set the tone for the market for today. The market also is still digesting yesterday’s IEA annual forecast which suggested that oil prices will not hit at $80 per barrel until 2020 while the EIA in their monthly oil forecast slightly raised demand and lowered non-OPEC production.
Both reports provided enough indications to support either side of the two main market views… the rebalancing view and the simply still bearish view. The market has been trading in a choppy range bound trading pattern since the third week of August. The spot WTI contract has traded in a range of about $42 per barrel on the support side to around $48 per barrel on the upper, resistance end. The market seems to be currently heading for the second test of the lower support area since the end of October.
With the OPEC meeting approaching on Dec. 4 the market is likely to continue to trade in the aforementioned choppy pattern even as the majority of the market is expecting Saudi Arabia led OPEC to continue with their market share policy.