Crude oil trading outlook: WTI futures advance on US outlook, Brent lower

WTI futures were higher during early trade in Europe today, while Brent futures were lower. The US signaled a possible easing of exports limitations, while traders await weekly oil inventories data.

West Texas Intermediate futures for settlement in August traded for $106.27 per barrel at 6:57 GMT on the New York Mercantile Exchange, up 0.23%. Prices ranged from $106.12 to $107.50 per barrel. The US contract dropped 0.13% yesterday, after a further 0.62% loss on Monday.

Meanwhile on the ICE in London, Brent futures due in August stood for a 0.46% drop at $113.93 per barrel at 6:57 GMT. Daily high and low stood at $114.65 and $113.90 per barrel, respectively. Brent’s premium to August WTI stood at $7.66, after Tuesdays closing margin of $8.43. The European contract added 0.30% yesterday, after dropping 0.60% on Monday.

“The volatility that we’ve seen today reflects the U.S. export news,” Ric Spooner, chief strategist at CMC Markets in Sydney, said for Bloomberg. “There are certainly a lot of inexorable economic forces that suggest the U.S. is going to relax the export ban in the long-term.”

US outlook

The US will allow exports of light crude after minimal refining, the Wall Street Journal reported yesterday. The innovative refining process, which qualifies the fuel for export as a refined petroleum product, allows Pioneer Natural Resources, the company which owns the facility, to circumvent a 41-year old ban on crude oil exports in the US.

“There has been no change in policy on crude oil exports,” Jim Hock, a spokesman for the Department of Commerce, said for Bloomberg.

Elsewhere, the US, which consume 21% of all oil, will post key economic data today. Durable goods orders for May are projected to stand for a 0.2% monthly growth, while core orders, which exclude transportation items, are set to add 0.4% on a monthly basis. Meanwhile, the final reading on GDP for Q1 will be revealed, and analysts forecast a figure of -1.8% annual growth.

Later, Markit will post its preliminary reading on US services PMI for June. Experts suggest a standing of 58.6 after 58.1 in May. A reading of 50 or higher means expansion, and vice versa. The greater the distance from 50, the more sizable an expansion or contraction.

Oil reports

The private American Petroleum Institute (API) released its reading on US oil inventories for the week ended June 20 yesterday. The Institute posted a 4 million-barrel increase for crude stocks, while gasoline added 2.2 million barrels. A Bloomberg survey suggested a 1.7 million-barrel draw for crude. The official Energy Information Administration (EIA) report is due later today.

Last weeks log revealed a smaller-than-expected drop for crude supplies, which declined by 0.6 million barrels. Imports of crude had slightly increased after dropping 20% over the previous two weeks. Meanwhile, motor gasoline stockpiles grew, as the report logged a 10% increase in gasoline production, for the highest output since 1986.

Iraq

Sunni militants, led by a group of extremists called ISIS (Islamic State in Iraq and the Levant), continued advancing throughout Iraq yesterday. Tribal fighters loyal to the Islamists captured Baiji refinery, Iraq’s foremost source of refined fuels, supplying about a third of the country’s fuel. A tribal spokesman said his tribe had “fully captured” the refinery, and that the advance towards Baghdad would continue, the BBC reported.

Elsewhere, insurgents seized all official border crossings in Syria and Jordan. The Jordanian army has been on full alert, protecting its borders against incursions, the Jordanian military said.

The Iraqi government insisted insurgents do not threaten Baghdad, nor the southern oilfields, which account for more than 75% of Iraqi oil output.

Iraq is OPEC’s second-top oil producer, and exports some 3 million barrels per day from its main southern terminal at Basra.

Technical view

According to Binary Tribune’s daily analysis, in case the West Texas Intermediate August future on the NYMEX breaches the first resistance level at $106.58, it probably will continue up to test $107.12. Should the second key resistance be broken, the US benchmark will most likely attempt to advance to $107.79.

If the contract manages to breach the first key support at $105.37, it will probably continue to drop and test $104.70. With this second key support broken, the movement to the downside will probably continue to $104.17.

Meanwhile, August Brent on the ICE will see its first resistance level at $115.01. If breached, it will probably rise and probe $115.56. In case the second key resistance is broken, the European crude benchmark will probably attempt to advance to $116.29.

If Brent manages to penetrate the first key support at $113.73, it will likely continue down to test $113.00. With the second support broken, downside movement may extend to $112.45 per barrel.