Crude oil trading outlook: WTI futures climb after US oil report, Brent steady

WTI futures were higher during early trade in Europe today, while Brent was steady. The US posted weekly oil inventories figures yesterday, supporting crude. Elsewhere, the US and EU stepped up sanctions against Russia as its efforts towards peace in Ukraine are seen as insufficient.

West Texas Intermediate futures for settlement in August traded for $101.45 per barrel at 6:30 GMT on the New York Mercantile Exchange, up 0.25%. Prices ranged from $101.57 to $101.37 per barrel. The US contract added 1.24% yesterday and has added some 0.4% so far this week.

Meanwhile on the ICE in London, Brent futures due in September stood for a 0.04% gain at $107.21 per barrel. Daily high and low stood at $107.35 and $107.13 per barrel, respectively. Brent’s premium to September WTI stood at $6.40, after last session’s closing margin of $6.57. The European contract gained 0.27% on Wednesday, leveling this weeks price movement.

“The large, seasonal draw in crude supplies shows demand picking up,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said for Bloomberg. “One hundred dollars is a good level of support and we should see a bit of a bounce.”

US oil report

The US Energy Information Administration (EIA) posted its weekly oil inventories report for the seven day through July 11 today. The log revealed a 7.525 million-barrel for commercial crude oil inventories, after the private American Petroleum Institute (API) had suggested a 4.8 million-barrel draw on Tuesday. A Bloomberg survey had projected a 2.75 million-barrel drop. The previous reading, for the week through July 4, showed crude inventories had dropped 2.4 million barrels.

Oil at Cushing, Oklahoma, the delivery point for the NYMEX contract and the largest hub in the US, was reported at 20.3 million barrels for a 0.6 million-barrel drop, after an increase of 0.4 million was logged for the previous week. Meanwhile, hubs at the Gulf Coast saw 2.8 million barrels drawn, after a further 4.2 million drop was reported last week.

Domestic production of crude oil was little changed for a reading of 8.592 million barrels per day (bpd), after more minor changes over the last three weeks. Meanwhile, imports of crude were slightly up at 7.427 million bpd.

Gasoline inventories added 0.171 million barrels for the week through July 11, while the API had reported a 1.6 million-barrel draw. Distillate fuels stockpiles levels increased by 2.528 million barrels, while the API posted a 1.3 million-barrel decrease on Tuesday.

Refinery utilization rate was up 2.2% for a standing of 93.8%, and a total increase of more than 7% for the last three weeks. Gasoline production this week was slightly lower at 9.775 million bpd, while distillates output averaged 5.172 million bpd.

Ukraine

The US and EU stepped up sanctions against Russia, as Moscows efforts to deescalate tensions in Ukraine are seen as insufficient. In addition to expanding the list of individuals, the US also targeted Gazprombank, the Russian gas giants bank, Rosneft and the Kalashnikov concern, limiting their access to US capital markets.

“The Russian leadership will see once again that its actions in Ukraine have consequences,” US President Obama said. “Ukrainians deserve to forge their own destiny”.

The EU also added that the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) would stop financing projects in Russia. The EIB alone has provided more than €1.6 billion for Russian ventures since 2003.

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 $101.84, it probably will continue up to test $102.49. Should the second key resistance be broken, the US benchmark will most likely attempt to advance to $103.37.

If the contract manages to breach the first key support at $100.31, it will probably continue to drop and test $99.43. With this second key support broken, the movement to the downside will probably continue to $98.78.

Meanwhile, September Brent on the ICE will see its first resistance level at $107.84. If breached, it will probably rise and probe $108.50. In case the second key resistance is broken, the European crude benchmark will probably attempt to advance to $109.05.

If Brent manages to penetrate the first key support at $106.63, it will likely continue down to test $106.08. With the second support broken, downside movement may extend to $105.42 per barrel.