Vang SJC

Yesterday WTI rose on poor data from U.S. economy and strong global demand.

WTI closed at $60.47, up by 0.79%.

In Asian session, there are not many changes in price due to stable fundamentals. In European session, oil flew strongly due to pressed dollar on positive data for the euro. The highest of the day set at $61.34.

U.S. oil is now traded at $61.16 at 4:40 p.m. GMT+7.

In the latter of the day, U.S inventory will be released, expected to drop by 1.7 million barrels.

Oil may be dragged down by:

  • According to EIA, surplus supply has doubled to 2.6 mbpd since the 2nd quarter of 2014. OPEC is intending to raise outputs as soon as possible. Venezuela wants to borrow $5 billion from China for domestic oil project investments, like the biggest oil field of Venezuela Orinoco. Venezuela hope boosting outputs from this field to compensate for government’s collapsing revenues from other traditional sectors and help fighting back economic recession. Besides, after finishing discussion on reopening oil and gas pipeline, Libya will double production to 800,00 bpd for next month, from current level of 400,000-460,000 bpd, according to NOC President Mustafa Sanalla. Libya’s objective is 1 mbpd in 2015 and 2.1 mbpd in 2017.
  • The FOMC on Wednesday (June 17th) will be about rate hike possibility. Statements from Fed Presidents will create significant waves for market. Recent data about U.S. economy seem to support for early rate hike in September or December 2015, therefore dollar’s strength may be reinforced, dragging oil down.
  • If Iran’s nuclear talks came to an agreement and sanction lifted in time, it would come back to the oil market with full capacity this year, which intensifies persisting oil glut. The balance in the market seems to be feeble.

However, other factors may support for oil for the time being:

  • Demand from U.S. and Asia: JP Morgan said in its weekly oil research note that U.S. production had posted a new high this week, but that it would start to drop. “We expect that U.S. crude production will start declining sequentially from this month, which combined with robust demand data will likely result in tighter balances in 2H2015,” it said. “Fundamentals are at an inflection point and will improve from here with high refinery runs this summer and sequentially declining U.S. crude production. As crude stocks erode, prices will gradually strengthen,” said U.S.-based Pira Energy.
  • OPEC’s oil report: Demand from Northern America will increase by 220,000 bpd and Latin America is 200,000 bpd, while demand of Middle Eastern will advance 220,000 bpd in 2015.

Forecast: Data about U.S. inventory and speech after Fed meeting will create big volatilities, oil may go down to $60.02 in Fibo.

Ban Mai