Crude oil trading outlook: WTI and Brent futures lower after US oil data, Libya export

WTI and Brent futures were lower during early trade in Europe, after a slump on US oil supplies on Wednesday. Libya looks set to resume exports from reopened terminals.

West Texas Intermediate futures for settlement in August traded for $101.86 per barrel at 6:35 GMT on the New York Mercantile Exchange, down 0.42%. Prices ranged from $102.04 to $101.72 per barrel. The US contract dropped 1.07% on Wednesday, after losing a further 0.6% so far this week.

Meanwhile on the ICE in London, Brent futures due in August stood for a 0.08% drop at $108.19 per barrel. Daily high and low stood at $108.24 and $108.03 per barrel, respectively. Brent’s premium to WTI stood at $6.33, after last session’s closing margin of $5.99. The European contract dropped 0.61% yesterday, and has lost over 2% this week so far.

“It’s drive time but we’re not really seeing a gain in consumption,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said for Bloomberg. “That might be the nail in the coffin for prices. The geopolitical picture isn’t as volatile as it once was.”

US oil inventories

The US Energy Information Administration (EIA) posted its weekly oil inventories report for the seven day through July 4 yesterday. The log revealed a 2.370 million-barrel draw for commercial crude oil inventories, after the private American Petroleum Institute (API) had suggested a 1.7 million-barrel draw on Tuesday. A Bloomberg survey had projected a 2.7 million-barrel drop. The previous reading, for the week through June 27, showed crude inventories had dropped 3.2 million barrels.

Oil at Cushing, Oklahoma, the delivery point for the NYMEX contract and the largest hub in the US, was reported at 20.9 million barrels for a 0.4 million-barrel gain, after a drop of 1.3 million was logged for the previous week. Meanwhile, hubs at the Gulf Coast saw 4.2 million barrels drawn, after a further 3 million drop was reported last week.

Domestic production of crude oil was little changed for a reading of 8.514 million barrels per day (bpd), after little change over the last two weeks as well. Meanwhile, imports of crude also saw minor change and logged at 7.285 million bpd. Inbound shipments of crude have dropped by about 1.4 million bpd over the past month, about 20% of current imports.

Gasoline inventories added 0.579 million barrels for the week through July 4, while the API had reported a 0.1 million-barrel increase, after last week saw 1.2 million barrels drawn. Distillate fuels stockpiles levels increased by 0.227 million barrels, while the API posted a 0.5 million-barrel decrease on Tuesday. Previously, distillates inventories had added 1 million barrels in the week through June 27.

Refinery utilization rate was unchanged for a standing of 91.6%, after a 3% increase was logged in the previous report, for a total increase of almost 5% for the last two weeks. Gasoline production this week was unchanged at 9.425 million bpd, after a 0.4 million bpd gain was recorded last week. Distillates output averaged 5.056 million bpd, also for a minor weekly increase.

Libya

Libya will begin to gradually increase exports through the two reclaimed terminals to avoid disrupting oil markets, Samir Kamal, the nation’s governor to OPEC, said yesterday according to Bloomberg. The National Oil Company was told to start marketing supplies from the two terminals earlier this week.

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.

Meanwhile, a pipeline from the Sharara field was also reclaimed on Tuesday. The deposit has a 300 000 barrels per day capacity, which is the equivalent of Libyas total production last month.

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 $103.31, it probably will continue up to test $104.33. Should the second key resistance be broken, the US benchmark will most likely attempt to advance to $105.06.

If the contract manages to breach the first key support at $101.56, it will probably continue to drop and test $100.83. With this second key support broken, the movement to the downside will probably continue to $99.81.

Meanwhile, August Brent on the ICE will see its first resistance level at $108.81. If breached, it will probably rise and probe $109.35. In case the second key resistance is broken, the European crude benchmark will probably attempt to advance to $109.69.

If Brent manages to penetrate the first key support at $107.93, it will likely continue down to test $107.59. With the second support broken, downside movement may extend to $107.05 per barrel.