Crude oil trading outlook: WTI and Brent futures gain ahead of official data on US oil inventories

WTI and Brent prices rose during early trade in Europe today, supported by bullish readings on US oil inventories in an industry report from late Tuesday. Traders await the official government data later today, and analysts expect to see relatively bearish figures.

WTI futures for September delivery on the NYMEX traded at $97.50 per barrel at 7:11 GMT, up 0.12%. Prices ranged from $97.38 to $97.72 per barrel. The contract dropped 0.93% yesterday, reaching a seven-month low at $97.00.

Meanwhile, September Brent on the ICE stood at $104.85 per barrel, up 0.23%. Daily low and high were at $104.72 and $105.06 per barrel, respectively. Brents premium to WTI was $7.35, after Tuesdays closing margin of $7.23. September Brent lost 0.76% yesterday to record a 13-month low at $104.07 per barrel.

“The main concerns are about the high levels of supply and soft demand,” Ben Le Brun, a markets analyst at OptionsXpress in Sydney, said for Reuters. “Fears over supply disruptions dont seem to be playing out as much as traders were pricing in weeks ago.”

The private American Petroleum Institute (API), which is funded by the US oil industry and collects data on a voluntary basis, logged a significantly larger than expected draw for both crude and gasoline inventories in its weekly report yesterday. Crude stocks were recorded to have lost 5.5 million barrels, while gasoline supplies were down 3.6 million barrels.

The official Energy Information Administration (EIA) report is due later today. A Bloomberg survey suggested a 1.55m draw for crude and no change for gasoline levels, while a Wall Street Journal poll forecast a drop of 1.7m for crude and a 0.1m gain for gasoline.

“Products are amply supplied across the globe, a situation that is unlikely to change appreciably even as refinery activity ramps down seasonally into the fall,” said energy-advisory firm Ritterbusch & Associates in a note.

Last week, US motor gasoline stockpiles rose to 218.2 million, a four-month high, despite the US being in the middle of the peak driving season. Crude oil inventories, however, fell for a fifth week by 3.7 million barrels to 367.4 million in the seven days through July 25th, while distillate fuel stockpiles, which include diesel and heating oil, added 0.789 million barrels.

Iraq, Libya

Kurdish oil exports were reported to be unaffected by fighting with the Islamists, who overran swathes of Iraq in the past two months. Genel Energy, the biggest producer in Kurdish Iraq, said the autonomous government has already loaded five cargoes in Ceyhan, Turkey, and two have been bought and paid for, Bloomberg reported.

Meanwhile, Kurdish forces are set to begin an offensive against the jihadists, with Iraqi PM Nouri Maliki ordering the air force to support the Kurds. This is the first real act of cooperation between the central government and the Kurdish autonomy since the conflict with the Islamic State began, the BBC reported.

Elsewhere, Libyas Ras Lanuf oil-exporting terminal will restart operations this week, the state National Oil Corp said. Authorities were also in set to resume operations at the Es Sider port. Both facilities were handed over by rebels last month, in a show of support to the new government.

Libya is currently OPECs smallest producer, with an output of some 450 000 barrels per day. The country holds Africas largest crude reserves, and has a potential output of more than 4 million barrels daily.

Technical support and resistance levels

According to Binary Tribune’s daily analysis, West Texas Intermediate September futures’ central pivot point on the NYMEX is at $97.68. In case the contract breaches the first resistance level at $98.37, it will probably continue up to test $99.35. Should the second key resistance be broken, the US benchmark will most likely attempt to advance to $100.04.

If the contract manages to breach the first key support at $96.70, it will probably continue to drop and test $96.01. With this second key support broken, movement to the downside will probably continue to $95.03.

Meanwhile, September Brent’s central pivot point on the ICE is projected at $104.78. The contract will see its first resistance level at $105.48. If breached, it will probably rise and test $106.36. In case the second key resistance is broken, the European crude benchmark will probably attempt to advance to $107.06.

If Brent manages to penetrate the first key support at $103.90, it will likely continue down to test $103.20. With the second support broken, downside movement may extend to $102.32 per barrel.