The API (American Petroleum Institute) is set to report its inventory data later today. Yesterday, WTI crude oil prices rose 0.4% and settled at $58.01 per barrel, 3.3% below the psychologically important level of $60.
On November 25, the United States Oil Fund LP (USO) was almost unchanged. Since late May, active WTI crude oil futures haven’t closed above the $60 level.
Oil prices steady
Today as of 7:27 AM ET, active crude oil futures were up 0.2%. Market expectations of a concrete trade deal between the US and China might have supported oil prices. According to CNBC, Robert Lighthizer, Steven Mnuchin, and Liu He had a discussion focused on resolving key trade issues.
Lighthizer and Munchin currently serve as US Trade Representative and Secretary of the Treasury, respectively. Liu is the vice premier of the People’s Republic of China. These three men are the architects of Phase 1 of the US-China trade deal.
Earlier, China demanded the simultaneous removal of a portion of the existing tariffs. However, Washington denied the request, increasing the pessimism around the deal last week.
The IEA (International Energy Agency) has estimated growth of 1.2 MMbpd (million barrels per day) in oil’s demand in 2020. For this demand growth to happen, global GDP should grow by at least 3.4%. If the US and China fail to resolve their trade dispute, we might see further contraction in the global growth rate. To learn more, read What’s Crude Oil’s Price Outlook This Week?
In addition, Saudi Aramco’s IPO could be behind steady crude oil futures. Volatile oil prices could affect Aramco’s valuation. Saudi Arabia is divesting around a 1.5% stake in Aramco at a total valuation of $1.7 trillion. Saudi Arabia is the largest producer of oil among OPEC members. In the past, the country has undoubtedly influenced oil prices. Read Are Crude Oil Prices Rising with Aramco’s IPO? to learn more.
API inventory data
This afternoon, the API will report its inventory data. A Reuters poll has forecast changes of -0.25 MMbbls (million barrels) and 1.5 MMbbls, respectively, in oil and gasoline inventories.
Any surprise buildup in the API’s report could push WTI crude oil futures near their 200-day moving average of $57.45. However, if the API reports a surprise draw, active WTI crude oil futures could inch toward the $60 level.
Tomorrow, the EIA (U.S. Energy Information Administration) will report its Weekly Petroleum Status Report. For the EIA report, a Reuters poll suggests a fall of 0.35 MMbbls in crude oil inventories and a rise of 1.5 MMbbls in gasoline inventories.
For the week that ended on November 22, the inventories spread is estimated to be 2%, one percentage point below the previous week. The inventories spread is the difference between crude oil inventories and their five-year average. This will be possible if the EIA reports a fall of 0.35 MMbbls in crude oil inventories for last week.
In fact, if the EIA reports any rise of less than 0.21 MMbbls in crude oil inventories, the inventories spread will contract. Oil prices and the inventories spread usually move inversely. Inventories Spread: Can Oil Prices Continue to Rise? explains this inverse relationship.