Crude oil trading outlook: WTI and Brent futures steady ahead of inventories data

WTI and Brent futures were little changed during early trade in Europe today. Two reports on US oil inventories are due later today and tomorrow, while Libya and Iraq calmed markets.

West Texas Intermediate futures for settlement in August traded for $103.53 per barrel at 6:43 GMT on the New York Mercantile Exchange, up 0.01%. Prices ranged from $103.58 to $103.33 per barrel. The US contract dropped 0.51% on Monday, after losing about 1.9% last week.

Meanwhile on the ICE in London, Brent futures due in August stood for a 0.13% drop at $110.10 per barrel. Daily high and low stood at $110.15 and $109.95 per barrel, respectively. Brent’s premium to WTI stood at $6.57, after last session’s closing margin of $6.71. The European contract dropped about 0.36% yesterday, after a 2.3% loss for last week.

“With geopolitical events subsiding, the market will turn to what the global economy is doing,” Jonathan Barratt, chief investment officer at Ayers Alliance Securities in Sydney, said for Bloomberg. “Libya is coming back online and it appears things have slowed in Iraq. Given where we are, a soft picture prevails.”

The private American Petroleum Institute (API) will post its weekly readings on US oil inventories for the seven days ended July 4. A Bloomberg survey suggests a 2.7 million-barrel draw for crude, while gasoline stocks are projected to have dropped 450 000 barrels.

The official EIA report is due on Wednesday.

Iraq, Libya

Last week saw some inconclusive developments in Iraq. The military, reinforced by urgently-purchased Russian fighter-jets, had indecisive actions against the ISIS-led militants in the northern half of the country. Meanwhile, the Iraqi parliament failed to elect new leadership, as Sunni and Kurdish representatives boycotted the vote, depriving the election body of a quorum.

The semi-autonomous Kurdish state in northern Iraq fields its own army, and has recently come under attack by ISIS. The Kurds had occupied Kirkuk, an oil-center which lies beyond the borders of their state in Iraq, after the regular Iraqi army fled from the insurgents earlier in June, and have now declared they will not leave the city before an independence referendum takes place, with Israel also voicing support for an independent Kurdistan.

Elsewhere, two oil-exporting ports in eastern Libya have been reopened after being closed for almost a year due to insurgency. The Es Sider and Ras Lanuf facilities are Libya’s biggest and third-biggest ports, and have a combined potential exporting capabilities of more than 0.5 million barrels per day.

The rebels who had occupied the ports have handed them over to the newly elected government as a sign of support.

Now the government has instructed the National Oil Company to start marketing supplies from the two terminals, Mohamed Elharari, spokesman for the state-run company, said for Bloomberg.

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 $104.02, it probably will continue up to test $104.50. Should the second key resistance be broken, the US benchmark will most likely attempt to advance to $104.92.

If the contract manages to breach the first key support at $103.12, it will probably continue to drop and test $102.70. With this second key support broken, the movement to the downside will probably continue to $102.22.

Meanwhile, August Brent on the ICE will see its first resistance level at $110.81. If breached, it will probably rise and probe $111.39. In case the second key resistance is broken, the European crude benchmark will probably attempt to advance to $111.85.

If Brent manages to penetrate the first key support at $109.77, it will likely continue down to test $109.31. With the second support broken, downside movement may extend to $108.73 per barrel.