Crude oil prices rose on Wednesday, after sharp losses in the previous session, as the focus shifts to a potential output-curbing deal from OPEC later this year and a surprise drawdown in U.S. crude stocks.
Round one of the U.S. presidential debate is over and as expected big punches were exchanged from both sides, but clearly no knockout blows were landed. Although polls were showing different outcomes of who won the debate, financial markets obviously declared Clinton as the winner.
Talks between Saudi Arabia and Iran had not gone well as the Iranians seemed intent on raising output to 5 million barrels a day and the Saudis wanted to have independent verification of oil output to make sure there was no cheating.
Saudi Arabia has offered to reduce oil production if rival Iran agrees to cap its own output this year, in a major compromise ahead of talks in Algeria next week, four sources familiar with the discussions told Reuters.
The energy complex are trading higher after the EIA released its latest weekly oil inventory report. The data showed Total Crude & Product stocks decreased by 6.034/mmbls to 1390.917/mmbls for week ending Sept. 16. Looking at the year-on-year for Total Crude & Product stocks we see we are now 93.2/mmbls above last year’s level for this time of the year and above the five-year average by 242.9/mmbls.
We've been searching so long to find an answer. Will the Federal Reserve have one? Crude, like every other market, is chopping around waiting for the Federal decision on interest rates. While it seems unlikely they will raise rates in September, the suspense has been killing liquidity in the market. Oil prices swing on obscure headlines and sometimes move with the dollar and other times do not.
Currently the spot WTI and Brent crude oil contracts seems to be heading toward their respective technical trading range lows. If most of the news remains biased to the bearish side the aforementioned contracts are likely to test the lows from the first of the month and if breached could result in an even deeper slide heading into the informal OPEC/non-OPEC meeting in Algeria in a few weeks.