Oil Fundamental Forecast: Bearish
- Crude oil prices[1] rose on earnings reports and the latest EIA inventory data
- Oil has OPEC output report, Fed, Brexit and US-China tensions awaiting
- On balance, risks for the commodity appear tilted to the downside ahead
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Crude Oil Prices Wrap
Last week, we saw some of the most aggressive advances in crude oil prices since the middle of September. On Wednesday, oil rallied just shy of 3 percent. The commodity rose as the latest earnings reports from the United States[3] helped fuel the S&P 500 and risk trends higher. Meanwhile, the latest EIA inventory report[4] showed an unexpected drawdown, adding fuel to the advance in the sentiment-linked commodity.
Oil Event Risk – OPEC Output Report, Federal Reserve, Brexit, US-China Tensions, Earnings
WTI crude has a plethora of event risk waiting for it in the week ahead, likely to bring forward some much-needed volatility. I say this because on balance, it is practically unchanged from where prices started in February, about 9 months ago. Since then, oil has had to contend with divergent fundamental forces. Primary among these is the conflict between coordinated supply reduction and the risk of fading demand.
The week ahead is arguably going to place more emphasis on the latter. Regarding the former, we do have the next Organization of Petroleum Exporting Countries (OPEC) survey of output for October. While it may continue to show fading production by the cartel to boost prices, the focus is probably on the December OPEC meeting. Earlier this month, it was reported that the group and its allies may favor deeper cuts.
Yet, despite their efforts,
