Oil Price Fundamental Daily Forecast – Light Volume Caps Gains, but Supported by EIA Draw, Brexit Hopes

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading nearly flat on Thursday as traders prepare for the Christmas holiday on Friday. Volume is well-below average in todays shortened trading session.

The markets are being supported as a drawdown in U.S. stockpiles of crude and gasoline lifted demand hopes, while investors also cheered a potential Brexit trade deal.

At 08:58 GMT, February WTI crude oil futures are trading $47.99, down $0.13 or -0.27% and February Brent crude oil is at $51.04, down $0.16 or -0.31%.

US Energy Information Administration Weekly Inventories Report

U.S. crude inventories fell by 562,000 barrels in the week to December 18 to 499.5 million barrels, the Energy Information Administration (EIA) said on Wednesday.

Gasoline stocks fell by a surprise 1.1 million barrels to 237.8 million barrels, the EIA said, while distillate stockpiles fell by a more-than-expected 2.3 million barrels to 148.9 million barrels.

Traders said that crude oil prices are also drawing support from new that Britain and the European Union were on the cusp of striking a narrow trade deal on Thursday, swerving away from a chaotic finale to the Brexit split.

US Drillers Add Oil and Gas Rigs for Fifth Week in a Row – Baker Hughes

U.S. energy firms this week added oil and natural gas rigs for a fifth week in a row as higher energy prices prompt producers to keep returning to the wellpad in recent months.

The oil and gas rig count, an early indicator of future output, rose 2 to 348 in the week to December 23, energy services firm Baker Hughes Co said in its closely followed report Wednesday.

The number of operating rigs has surged since August, when it hit a record low of 244, according to Baker Hughes data going back to 1940.

U.S. oil rigs rose to 264 this week, their highest since mid-May, while gas rigs rose to 83, their highest since the end of April, according to Baker Hughes data.

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Even though the oil contract was down about 22% since the start of the year, it was still up about 170% over the past eight months on hopes global economies and energy demand will return as more governments relax coronavirus lockdowns.

Analysts said those higher oil prices have encouraged several energy firms to drill more.

Looking forward, most energy firms have said they plan to cut spending in 2020 and 2021 as they continue to focus on improving earnings rather than just boosting output.