Move Towards $59 Stalls
Oil prices are down slightly in Wednesday trade. West Texas Intermediate oil for October delivery is trading at $57.58 in the North American session, down 0.50% on the day. On Tuesday, crude touched a high of $58.77, its highest level since July 16. However, crude was unable to consolidate and has slipped to the mid-57 region.
Decline Expected in U.S. Crude Inventories
U.S. crude inventories continue to report declines, which has put upward pressure on oil prices. Last week, crude jumped 2.9%, after the Energy Information Administration (EIA) reported that crude inventories fell by 4.8 million barrels, a much stronger decline than the estimate of a decline of 2.8 million. U.S. stockpiles have now fallen for three straight weeks. Later on Wednesday, the EIA releases its weekly report. The forecast is for another decline of 2.7 million. If the estimate is within expectations, there is a strong chance of oil prices moving higher in response.
OPEC Members to Hold Meeting (Maybe)
OPEC members did not hold a meeting on Wednesday, as was expected. The meeting has tentatively been rescheduled for Thursday. Investors shouldn’t expect any sudden moves in oil prices, as these meetings rarely trigger sharp movements in oil prices. OPEC is expected to continue trimming crude production, which would help crude maintain its recent gains. Saudi Arabia wants to keep oil prices steady, and as the largest member, it’s unlikely that Iran and other countries that want to cut supplies and boost prices will be able to advance their agenda.
Inflation, Retail Sales Could Affect Crude
Investors are always closely attuned to key U.S. fundamentals, and we’ll get a look at CPI and retail sales reports on Thursday and Friday. The markets are braced for soft numbers, and if these forecasts are accurate, the “R” word (recession) will be bandied about, and this could sour investors on oil and send it to lower levels.
This article was originally posted on FX Empire
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