U.S. West Texas Intermediate crude oil futures are edging higher on Friday, grinding out a small gain for a third session out of four. Despite what looks like to be a counter-trend bottoming process, the market is still trading lower for the week. However, it’s in a position to turn higher for the week if it continues to strengthen throughout the session.
While some support is being generated from the signing of the U.S.-China trade deal, the OPEC+ production cuts and a bigger than expected weekly inventory draw, perhaps keeping a lid on prices is a report from the International Energy Agency (IEA) that said it expected oil production to outstrip demand.
In addition to the fundamental developments, technical factors are also contributing to this week’s recovery with the market finding support following a test of a key 50% level on the daily chart.
This week, numerous factors contributed to the sluggish price action. There was no particular theme in the data releases, which leads us to believe prices will remain rangebound over the near-term.
American Petroleum Institute Weekly Inventories Report
The API reported on Tuesday a surprise crude oil inventory build of 1.1 million barrels for the week-ending January 10. Analysts were looking for a 474,000-barrel draw in inventory.
The API also reported another build of 3.2 million barrels of gasoline for the week-ending January 10 after last week’s large 6.7-million-barrel build.…