Fundamentals
WTI trades around $42 after moving higher yesterday on information from market intelligence firm Genscape. The company reported that there will be a drawdown (reduction) in the weekly inventory data.
Attacks in Brussels caused sentiment to move from risk-on (investments which are considered risky, like oil) to risk-off (investments considered less risky, such as bonds or gold).
Japanese Flash Manufacturing PMI came in at 49.1, showing a contraction within the sector. This is a worrying sign for the region and oil demand within Asia.
United States Manufacturing PMI came in at 51.4 below expectations of 51.8, however still above 50, indicating growth within the sector.
Technicals
The 200 SMA (Simple Moving Average) is currently at $42.08. A close above this level should see WTI move up to $47.00 on the prospect of strong gasoline demand. If the API data comes out negative, the market should retrace to $38.47.
What to expect tomorrow?
United States (U.S.) New Homes Sales and the Department of Energy (DoE) weekly oil report. U.S. Homes Sales will be watched as a strong labour market should be reflected in the homes sales data. If the home sales data comes out lower than forecast, analysts might start to question the stability of the U.S. employment market. The DoE reports expects a build (increase) in inventory and a drawdown (decrease) in both gasoline and distillate stocks. A strong drawdown in gasoline and distillates should be enough to keep the market moving higher.
- U.S. New Home Sales forecast 5.1 million
- U.S. Crude Oil Inventories forecast 3 m/b
- U.S. Gasoline Stocks forecast -1.825 m/b
- U.S. Distillate Stocks forecast -0.5 m/b
Developments
The OPEC and non-OPEC headlines are making the rounds with Russian President Vladimir Putin in talks with the Qatari Emir regarding the meeting next month. The Emir has openly invited all OPEC and non-OPEC producer to participate.
Saudi Arabian Oil company CEO, Amin H. Nasser stated that the oil price is unlikely to rebound to levels seen in 2013 / 2014, but will increase by the end of the year.