It is very likely that the price of oil may have put in its low for the year. Barring any shock headlines or economic catastrophes, the technical seasonal outlook and the fundamentals suggest that the downside correction in oil should be over. 

Oil should post a fourth day of gains as the American Petroleum Institute (API) reports a 5.17-million-barrel supply drop and raises serious doubts about last week’s massive oil supply increase, it should also reignite concerns of a tightening global oil market place. The API also reported that supply in the NYMEX delivery point rose by a much less than expected 195,000 barrels.

Last week’s massive crude oil supply increase was built on a surge of oil imports. Now a week later it looks as if the market is going to take back a large part of that increase and now the focus will once again focus on the upcoming Iranian sanctions and the potential for more production losses from the failing socialist state Venezuela. It will also focus on the fact that the U.S. economy is still firing on all cylinders and that is keeping the demand for gasoline and distillate extremely strong.

Refiners last week were running at a record high, but this week according to API, gasoline supply fell by 930,000 barrels. That was more than the 500,000 barrels expected. U.S. distillates saw an increase of 1.8 million barrels more than the 1.5 million barrels expected but refiners must focus on those fuels as the classification is still below normal for this time of year and winter is coming.

Oil actions seemed to suggest that the announced release of 11 million barrels of oil, from the Strategic Petroleum Reserve, is a nice gesture but won’t be enough to replace oil lost by Iranian sanctions. On the low-end, Iranian sanctions will cost the globe 1 million to 1.5 million barrels of oil a day. So, in the best-case scenario the SPR oil will be gone in 11 days. It is sour crude, so the refiners will be happy to turn it into much needed distillate.

Another risk down the road to the market is the Paul Manafort conviction, Michael Cohen’s plea deal and the potential risk of a President Trump Impeachment. While that is down the road and the market only had a short-term downward reaction, if this news sways the midterms it won’t bode well for the economy or oil demand. Love Trump or hate him, he has been a major factor in the soaring U.S. economy and record U.S. oil demand. His movements in reducing regulations and cutting taxes has unleashed the world’s largest economy that was being held back by bureaucratic red tape, over regulation and bad tax policies. I know that now the Democrats are trying to take credit for the economy but how can you take credit for doing things that you said was impossible to do in the first place. Things like a 4.1% GDP or bringing back U.S. manufacturing and jobs. A perceived return to more regulation and higher taxes may reverse the course of prosperity and perhaps send the economy back into recession.

Reuters is reporting that “The production numbers of OPEC and (countries) outside OPEC will be reviewed at the meeting in Algeria, and before the end of the current year; there will be an agreement on a mechanism to monitor output next year.