Crude oil trading outlook: WTI and Brent futures climb ahead of US oil report, China data

WTI and Brent futures were climbing during early trade in Europe today. A private survey suggested crude stocks dropped a sizable chunk last week, ahead of the official EIA report later today. Elsewhere, China posted some encouraging economic data, supporting contracts.

West Texas Intermediate futures for settlement in August traded for $100.42 per barrel at 6:17 GMT on the New York Mercantile Exchange, up 0.46%. Prices ranged from $100.48 to $100.07 per barrel. The US contract dropped 0.94% yesterday, after adding 0.08% on Monday.

Meanwhile on the ICE in London, Brent futures due in September stood for a 0.16% gain at $107.05 per barrel. Daily high and low stood at $107.09 and $106.75 per barrel, respectively. Brent’s premium to September WTI stood at $7.06, after last session’s closing margin of $7.35. The European contract lost 0.77% yesterday, after gaining 0.42% on Monday.

The private American Petroleum Institute (API) posted its readings on US oil inventories yesterday. Crude stocks were shown to have dropped 4.8 million barrels. A Bloomberg survey suggested crude stocks lost 2.75 million barrels, while distillates and gasoline added 2 million barrels and about 1 million, respectively.

Last week’s official log revealed a 2.370 million-barrel draw for commercial crude oil inventories, gasoline inventories added 0.579 million barrels, while distillate fuels stockpiles levels increased by 0.227 million barrels.

China

Several key readings on the Chinese economy, the worlds second-top oil consumer, were reported today. GDP growth for Q2 of 2014 was logged at 2.0% on a quarterly basis and 7.5% year-on-year.

Industrial production for June was at a 9.2% annual growth, also above expectations, while fixed asset investments, also for June, added 17.3% since a year ago.

All figures stand above expectations and add on their respective previous reading.

“It’s moderately positive data,” Ric Spooner, chief strategist at CMC Markets in Sydney, said for Bloomberg today. To see Chinese “industrial production figures creeping up again is a good sign and reflects the improved export market and also strength in the domestic sector.”

Libya

Renewed fighting was reported at Tripoli airport yesterday, as rival armed groups committed rockets and other heavy weaponry to the battle.

The clashes at the airport erupted last week, leaving at least 8 people dead and some 30 injured, the BBC reported.

The Libyan government even proposed foreign peacekeepers be brought in to help stabilize the country.

“The government has studied the possibility to bring international forces to enhance security”, government spokesman Ahmed Lamine said at a press conference.

Various gangs and armed groups still control swathes of Libyan territory, which they took when the former dictator Muammar Gaddafi was ousted.

However, the country’s output was at 470 000 barrels per day, a spokesman for the state-run National Oil Corp (NOC) said on Sunday, after averaging 300 000 for the month of June, Reuters reported. The country, however, remains the lowest contributor among the OPECs member-states.

Libya holds Africa’s largest crude reserves and has a potential output of some 4 million barrels per day.

Technical view

According to Binary Tribune’s daily analysis, in case the West Texas Intermediate August future on the NYMEX breaches the first resistance level at $101.01, it probably will continue up to test $102.06. Should the second key resistance be broken, the US benchmark will most likely attempt to advance to $103.06.

If the contract manages to breach the first key support at $98.96, it will probably continue to drop and test $97.96. With this second key support broken, the movement to the downside will probably continue to $96.91.

Meanwhile, September Brent on the ICE will see its first resistance level at $107.85. If breached, it will probably rise and probe $108.82. In case the second key resistance is broken, the European crude benchmark will probably attempt to advance to $109.95.

If Brent manages to penetrate the first key support at $105.75, it will likely continue down to test $104.62. With the second support broken, downside movement may extend to $103.65 per barrel.