Oil Price Fundamental Daily Forecast – Down on Position-Squaring Ahead of January 4 OPEC+ Summit

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are inching lower on Thursday in what is expected to be another low-volume holiday session.

Traders are showing little reaction to yesterday bigger-than-expected drawdown in U.S. stockpiles, while worries about additional coronavirus restrictions and lockdowns could be capping gains.

At 12:04 GMT, February WTI crude oil is trading $47.92, down $0.48 or -0.99% and March Brent crude oil is at $51.06, down $0.57 or -1.10%.

Energy Information Administration Weekly Inventories Report

On the supply side, U.S. crude inventories fell by 6.1 million barrels in the latest week to 493.5 million barrels, exceeding analysts expectations in a Reuters poll for a 2.6 million-barrel drop, as crude oil exports rose.

Exports rose to 3.6 million bpd from 3.1 million bpd a week earlier, according to the data for the week-ended December 25.

U.S. gasoline stocks fell by 1.2 million barrels in the week to 236.56 million barrels, the EIA said, compared with analysts expectations in a Reuters poll for a 1.7 million-barrel rise.

Distillate stockpiles, which include diesel and heating oil, rose by 3.1 million barrels in the week to 152.03 million barrels, versus expectations for a 0.5 million-barrel rise, the EIA showed.

Traders said that despite the supportive report, crude markets seized on the large distillate build, and turned lower after the data.

Additionally, U.S. energy firms this week added 3 oil and natural gas rigs to the best quarter for boosting the rig count since the second quarter of 2017, according to data from Baker Hughes.

New Lockdowns and Restrictions？

On the demand side, a new variant of the virus in the United Kingdom has led to the reimposition of movement restrictions, hitting near-term demand and weighing on prices, while hospitalizations and infections have surged in parts of Europe and Africa.

Earlier in the month, both OPEC and the International Energy Agency lowered their demand forecasts for 2021.

Short-Term Outlook

Heading into next week, all eyes will be on a January 4 meeting of the Organization of the Petroleum Exporting Countries and allies, including Russia, a group known as OPEC+. The group is set to boost output by 500,000 barrels per day in January.

The January increase has been priced into the market for weeks. What traders will react to is what the OPEC+ members have to say about a February increase.