Crude oil trading outlook: both Brent and WTI futures gain; US data on stockpiles, Libya pressure

Brent futures regain some losses during early trading in Europe, after a sizable drop on Monday due to bearish news from Libya. West Texas Intermediate also added to the last close, investors eye the upcoming data on US inventories.

West Texas Intermediate futures for delivery in June traded for $101.20 per barrel at 7:44 GMT on the New York Mercantile Exchange, adding 0.36%. Daily high and low stood at $101.25 and $100.81 per barrel respectively. On Mondays session the US brand dropped to the lowest price level in almost three weeks at 100.33. Over the last four sessions the US crude benchmark lost 2.95%.

Meanwhile on the ICE in London, Brent futures for June recorded a 0.43% gain to trade for $108.58 per barrel at 7:44 GMT, prices ranging from $108.00 to $108.63 per barrel. Brent’s premium to WTI stood at $7.38. Yesterday prices fell to near a 2-week low of 107.86, registering the biggest drop in almost a month, while previously, during Friday’s session, the European brand reached the highest price level since early March at $110.63 per barrel.

News that Libya is lifting force majeure off of the eastern Zueitina oil exporting harbor pressured Brent on Monday, and the European benchmark posted the biggest drop since early April. Earlier in the month Libyas state National Oil Corp (NOC) resumed oil exports from Hariga – one of the other oil ports, seized by militants last year, which was freed after successful negotiations. Two other ports remain under militant control, however, and are not operating. Libyas crude oil exports sank to 250 000 barrels daily, from 1.4 million a year ago, since rebels took control of the eastern ports.

“Investors were still cautious about Libyas output despite news on Zueitinas restart,” said for Reuters Mark Keenan, head of commodities research in Asia at Societe Generale.
“The market has responded to it but until we see tankers actually loading there will be an element of caution and risk premium in the Brent prices.”

Ukraine

An important support for crude oil price, the crisis in Ukraine kept fears over integrity of supplies from Russia – the worlds top energy producer. Monday saw the US extend the list of sanctions to Russian individuals and companies, adding 7 people and 17 firms. Later today the EU is expected to announce 15 new names to add to its account of frozen assets belonging Russian officials. The Kremlin threatened that its response will be “painful”.

Sanctions seemed to have little impact on prices, though: “Its very unlikely that any formal sanctions will extend to the crude oil or energy channels,” said for Reuters Mark Keenan. “They rely too much on each other if you take Russia and Europe together.”

In Ukraine itself, tensions are rising. The BBC reported that as many as 40 people, including journalists, international observers, Ukrainian military personnel and pro-western activists are held hostage in the town of Sloviansk – a bastion of pro-Russian separatism. Elsewhere, the eastern cities of Kharkiv and Donetsk saw bloody clashes between separatists and people, demonstrating for the unity of the country, while the extremist Right Sector nationalist group demanded arms from the authorities, to battle the pro-Russian militants.

US crude stockpiles

Upcoming data on crude oil supplies in the US is expected to reveal further gains in the worlds top consumer, with expectations of stockpiles adding to the record-high figure from last week, pressuring crude. A Bloomberg survey put the figure at 1.1 million barrels added for the week ended April 25th, ahead of data official data from the Energy Information Administration on Wednesday, while a Reuters poll suggests inventories have risen by 1.9 million barrels. Later today the private American Petroleum Institute will release its own report on stockpiles.

Last week crude oil stockpiles rose by 3.524 million barrels in the week ended April 18th, to reach 397.7 million, exceeding expectations of a 2.3-million barrels increase, despite a higher refinery utilization rate at 91.0%. Gasoline inventories decreased by 0.274 million barrels, far below expectations of a 1.713-million decline, while distillate fuels gained 0.597 million barrels in supplies, in contrast to a forecast of a 0.463-million drop.

Technical view

According to Binary Tribune’s daily analysis, in case WTI June crude manages to breach the first resistance level at $101.46, it will probably continue up to test $102.09. In case the second key resistance is broken, the US benchmark will probably attempt to advance to $102.65.

If the contract manages to breach the first key support at $100.27, it will probably continue to slide and test $99.71. With this second key support broken, the movement to the downside will probably continue to $99.08.

Meanwhile, Brent will see its first resistance level at $109.59. If breached, it will probably rise and test $111.07. In case the second key resistance is broken, the European crude benchmark will probably attempt to advance to $111.93.

If Brent manages to penetrate the first key support at $107.25, it will likely continue down to test $106.39. With the second support broken, downside movement may extend to $104.91 per barrel.