Crude oil trading outlook: Brent futures below $100, WTI edge higher

WTI futures were slightly higher during early trade in Europe today, while Brent was lower, as investors assessed supply and demand prospects ahead of key US oil stocks data. Both benchmarks logged multi-month lows on Monday, despite EU targeting Russian oil companies with its latest round of sanctions.

WTI futures for October delivery on the New York Mercantile Exchange traded at $92.91 per barrel at 7:05 GMT today, up 0.27% for the day. Prices ranged from $92.78 to $93.19 per barrel. The US benchmark dropped 0.68% on Monday, reaching a nine-month low at $91.80.

Meanwhile on the ICE in London, October Brent stood at $99.96 per barrel, down 0.24%, daily prices between $99.87 and $100.32 per barrel. October Brents premium to its US counterpart narrowed to $7.05. The European benchmark dropped 0.61% on Monday, reaching a 16-month low of $99.36.

Prices reached multi-month lows on Monday, as investors saw a bearish Chinese foreign trade report spell a gloomy outlook for oil demand in the second-top consumer, after a similarly disappointing US payrolls figure was seen hurting crude on Friday.

“Seasonally, youre not really getting stronger (demand) at the end of the year,” Eric G. Lee, commodities strategist at Citi Research in New York, said for The Wall Street Journal. “The drop off in Brent prices began at the height of summer, so one shouldnt expect a pick up.”

Investors now eye upcoming US oil inventories hard data to gauge demand in the worlds top oil consuming economy.

The industry-funded American Petroleum Institute (API) is due to release its independent readings today, ahead of the official Energy Information Administration (EIA) log on Wednesday.

A Reuters poll suggests crude stocks fell by 1.5 million barrels in the week through September 5.

Last weeks EIA report showed a 0.9m-barrel draw for crude and a 2.3m decline in gasoline stocks, while distillates added 0.6m.

“We have the EIA numbers to look out for; they have been showing pretty good trends,” David Lennox, a resource analyst at Fat Prophets in Sydney, said for Bloomberg. “Barring any geopolitical events, the oil price might just meander along.”

Investors will be increasingly shifting focus on EIAs distillates figure. Demand for distillates, a category which includes diesel and heating fuel, would be growing as winter draws by, pumping up heating demand.

Meanwhile, geopolitical tensions around the globe failed to halt the complete removal of crude prices risk premium.

Ukraine, Middle East

Ukraines conflict was in the heart of significant price fluctuations earlier this year, but by now investors have grown resilient towards speculation that the tensions between Russia, the worlds top energy producer and exporter, and the West will lead to globally negative ramifications for crude oil.

Even the adoption of further economic sanctions targeted directly at leading Russian oil companies failed to affect the global benchmark.

The EU said the new measures were agreed upon, but would come into effect “some days into the future” signaling that the real application of the new sanctions depends on Moscows stance in Ukraines peace process.

Meanwhile, Middle Eastern producers continued exports unaffected by a number of conflicts, with output rising in both war-torn Libya and insurgent-afflicted Iraq.

“Investors moved into oil in June looking for a hedge against the uncertainty in Iraq,” Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas, said for the Financial Times. “But this unravelled when production remained intact. The return of Libyan production has really helped to move the price lower and has extended the deleveraging process out of oil.”

Investors now eye any moves by OPEC, and most probably Saudi Arabia, the worlds leading oil exporter, as the $100 per barrel price has been set as benchmark for OPEC, suggesting the organization would act in order to support it.

Saudi Arabia will probably be switching off some production to bump up prices, though any announcement is yet to be made.

Technical support and resistance levels

According to Binary Tribune’s daily analysis for Monday, West Texas Intermediate October futures’ central pivot point is at $92.69. In case the contract breaches the first resistance level at $93.59, it will probably continue up to test $94.51. Should the second key resistance be broken, the US benchmark will most likely attempt to advance to $95.41.

If the contract manages to breach the first key support at $91.77, it will probably continue to drop and test $90.87. With this second key support broken, movement to the downside will probably continue to $89.95.

Meanwhile, October Brent’s central pivot point is projected at $100.19. The contract will see its first resistance level at $101.01. If breached, it will probably rise and test $101.83. In case the second key resistance is broken, the European crude benchmark will probably attempt to advance to $102.65.

If Brent manages to penetrate the first key support at $99.37, it will likely continue down to test $98.55. With the second support broken, downside movement may extend to $97.73 per barrel.