Oil Price Fundamental Daily Forecast – Traders Betting on Brief China Demand Crisis
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are inching higher on Wednesday on increased risk appetite amid broad optimism as new coronavirus cases fell for a second day in China. Additionally, traders continue to underpin prices in the hopes OPEC and its allies will increase production cuts. In a new development, concerns rose over supply after a U.S. move to cut more Venezuelan crude from the market.
At 10:23 GMT, April WTI crude oil is trading $53.00, up $0.71 or +1.36% and April Brent crude oil is at $58.54, up $0.79 or +1.37%.
Coronavirus Update
Although China is still struggling to get manufacturing going again, traders have turned a little more optimistic about future demand after official data showed that new cases of the coronavirus in China fell for a second straight day. Nonetheless, the World Health Organization (WHO) has cautioned there is not enough data to know if the epidemic was being contained.
Trump Administration Blacklists Russia Producer in Venezuela
In a move that trims supply from the global market, the United States on Tuesday ramped up pressure on Venezuela by blacklisting a subsidiary of Russian state oil major Rosneft that President Donald Trump’s administration said provides a financial lifeline to President Nicolas Maduro’s government.
U.S. officials accused the Rosneft subsidiary of propping up the Venezuelan oil sector and engaging in “tricks” and ship-to-ship transfers to actively evade American sanctions.
“I think this is a very significant step, and I think you will see companies all over the world in the oil sector now move away from dealing with Rosneft Trading,” Elliott Abrams, the U.S. special representative for Venezuela, told reporters.
Hopes of OPEC+ Production Cuts Still Linger
OPEC and its allies, including Russia, have been considering further production cuts to tighten supply and support prices. Recently an advisory panel recommended to lower supply by a further 600,000 barrels per day (bpd). This is on top of their pledge to cut oil output by 1.7 million bpd until the end of March.
However, the plan stalled when Russia said it needed more time to study the situation before making a decision on whether to go along with the production cuts.
Daily Forecast
A supply reduction and the possibility of stabilizing demand in China are underpinning WTI and Brent crude oil prices on Wednesday. Prices could get a further boost if Russia announces it is going to go along with the recommended additional production cuts.
Prices are likely to fall sharply if Russia determines additional output cuts are unnecessary.
At 21:30 GMT, traders will get the opportunity to react to the latest American Petroleum Institute (API) weekly inventories report. It is expected to show a 3.3 million barrel build. Last week, the U.S. Energy Information Administration (EIA) reported an unexpected 7.5 million barrel build.
This article was originally posted on FX Empire
More From FXEMPIRE:
Crude Oil Forecast – Crude Rises as U.S. Slaps Sanctions on Russian Oil Giant
Price of Gold Fundamental Daily Forecast – Bulls Hoping Fed Minutes Reveal Coronavirus Concerns
AUD/USD Price Forecast – Australian Dollar Continues To Fail
Crude Oil Price Update – Short-Term Trend is Up, but Buyers Treading Lightly
