Yesterday oil prices surged on supportive US crude inventories. According to EIA, US oil inventories fell by 4.2 million barrels to 459.7 million barrels last week, more than the expectations of analysts (down 184,000 barrels), showing stronger energy demand than people thought.
WTI rose 2.2% to $48.85. Also in EIA’s report, US oil production fell 145,000 bpd to 9.4 million barrels per day.
Today, WTI stablizes at around $48.77, after the FOMC meeting signaled interest rates will be raised this year.
Saudi Arabia will start cutting production in the fall when demand is not as great as summer. Output is expected to decline by 200,000-300,000 bpd to 10.3 million bpd starting in September.
According to EIA, Saudi Arabia has the capability to push its output to 12 million bpd in 3 months, but they never try to do this before. Compared with the current oversupply of 2 million bpd, Saudi Arabia cuts probably just like “a drop in the busket”.
Tonight the US will release advance GDP of the second quarter 2015, the most desired data in the week. After the Fed’s optimistic statement in the FOMC meeting about the labor market and the economy outlook, investors can expect a “satisfied” figure. Dollar may be supported and created pressure on oil prices.
Still not enough elements to determine whether the oil market has reversed the trend or just a correction, so the price will run wildly and unpredictably, depending on dollar data.
Forecast: WTI prices hit $ 47.00 price zone then pop up, it’s likely that it would go back to test the support at $47 again. Or maybe it will rebounce to $49.20 to get the momentum plunging further.