Crude oil trading outlook: WTI and Brent futures steady ahead of US supplies report, more economic data

WTI and Brent futures traded slightly higher during early hours in Europe today, ahead of the US weekly stockpiles report. Later today, the Eurozone will also post readings on GDP growth and services PMI, before an imperative interest rate decision tomorrow. The US will also reveal employment data and services PMI.

West Texas Intermediate futures for settlement in July traded for $102.84 per barrel at 7:05 GMT on the New York Mercantile Exchange, up 0.18%. Prices ranged from $102.69 to $102.98 per barrel. Yesterday WTI closed for a 0.19% gain, after on Monday it lost 0.23%.

Meanwhile on the ICE in London, Brent futures due in July stood for a 0.10% gain at $108.93 per barrel at 14:08 GMT. Daily high and low stood at $109.02 and $108.81 per barrel, respectively. Brent’s premium to WTI stood at $6.09, on par with Tuesdays closing margin of $6.16. Yesterday the European brand closed for a 0.01% drop, after on Monday it lost a further 0.53%.

The American Petroleum Institute (API) released its weekly log of oil inventories in the US, to suggest stockpiles saw a 1.4 million barrel draw for the week through May 30, with further a decline at Cushing. Distillates were put at a 0.3 million barrel drop, while gasoline were projected to have added 0.8 million. The official Energy Information Administration (EIA) report is due later today. Analysts surveyed by Bloomberg propose a 0.25 million barrel growth for crude supplies, while a Reuters poll suggests 0.3 million decrease.

“The low inventory at Cushing is supporting the oil market,” said for Bloomberg Ken Hasegawa, energy trading manager at Newedge Group in Tokyo, said by phone today. “The API data showed some decrease in crude stocks, and the market started with gains.”

Economic outlooks

Several reports from top oil-consuming economies are due today. The Eurozone, which consumes about 14% of all oil, will report on GDP growth and services PMI. Preliminary Q1 GDP growth for 2014 is projected to stand at an unchanged 0.2% on a quarterly basis. Markits final standing services PMI for May will probably be a repeat of previous figures at 53.5.

Previously, the Eurozone posted disappointing CPI, reaffirming speculation that the European Central Bank (ECB) will indeed take steps to ease the deflationary pressure, as suggested by ECB President Mario Draghi in May. The ECB will reveal a crucial interest rate decision tomorrow.

“At the moment, were factoring in a little contribution to global demand for oil from Europe,” said for Reuters Michael McCarthy, chief strategist at CMC Markets in Sydney.”Technically were in no mans land for both Brent and West Texas, about mid-way between support and resistance so theres not a lot to guide us ahead of the ECB decision.”

Later today, the US, which account for 21% of world oil consumption, will reveal preliminary employment data and services PMI. Analysts suggest ADP will post 210 000 added payrolls in May. Later, ISM will reveal its reading on non-manufacturing PMI for May, with forecasts of a standing at 55.5 for a slight increase in expansion rate for services.

Later this week, on Thursday HSBC will post services PMI for China, while the EU will reveal retail sales and the crucial ECB interest rate decision. Friday will close the week with reports for industrial production in Germany, and key data on payrolls in the US.

Yesterday the US posted growing factory orders, although at a slower pace, while the EU recorded minor improvement for unemployment and a significant decrease in CPI to 0.5%. HSBC logged Chinas manufacturing PMI to be declining, for a quicker contraction in factory activities. Earlier data showed growing US manufacturing PMI.

Ukraine

US President Barack Obama unveiled a plan to spend an additional $1 billion on military drills and dislocations across Eastern Europe, as tensions with Russia over Ukraine are still not cooling. Mr Obama is in Warsaw for the 25th anniversary of the end of communist rule, and will meet Ukraines president-elect Petro Poroshenko.

In Ukraine itself, fighting continues, as the military crackdown on the pro-Russian armed rebels swings into full force, with airstrikes and heavy weaponry. Yesterday separatist troops attacked a military post, reportedly killing one and injuring a dozen. Luhansk also saw bitter fighting, with airstrikes bombing city hall, where rebels had barricaded inside. On Monday, hundreds of separatists attacked a border-troops base near Luhansk.

Technical view

According to Binary Tribune’s daily analysis, in case the West Texas Intermediate July future on the NYMEX breaches the first resistance level at $102.94, it probably will continue up to test $103.21. Should the second key resistance be broken, the US benchmark will most likely attempt to advance to $103.57.

If the contract manages to breach the first key support at $102.31, it will probably continue to drop and test $101.95. With this second key support broken, the movement to the downside will probably continue to $101.68.

Meanwhile, July Brent on the ICE will see its first resistance level at $109.09. If breached, it will probably rise and probe $109.37. In case the second key resistance is broken, the European crude benchmark will probably attempt to advance to $109.75.

If Brent manages to penetrate the first key support at $108.43, it will likely continue down to test $108.05. With the second support broken, downside movement may extend to $107.77 per barrel.