Crude oil trading outlook: WTI and Brent futures lower ahead of US oil inventories reports, Libya fighting

WTI and Brent futures were lower during early trade in Europe today, as traders await two separate reports on US oil inventories later today and tomorrow. Fresh fighting was reported in Libya, as the government suggested foreign peacekeepers be brought in.

West Texas Intermediate futures for settlement in August traded for $100.87 per barrel at 6:38 GMT on the New York Mercantile Exchange, down 0.04%. Prices ranged from $101.06 to $100.77 per barrel. The US contract added 0.08% on Monday, after having lost about 3% last week.

Meanwhile on the ICE in London, Brent futures due in September stood for a 0.23% drop at $107.46 per barrel. Daily high and low stood at $107.69 and $107.32 per barrel, respectively. Brent’s premium to September WTI stood at $7.01, after last session’s closing margin of $7.23. The European contract gained 0.42% yesterday, and also dropped about 3% last week.

“The key focus will be the EIA numbers,” David Lennox, a resource analyst at Fat Prophets in Sydney, said for Bloomberg today. “The U.S. drive time looks solid but not as good as we were anticipating. The market has lost interest in the Middle East and that’s why we’ve seen a weakening in prices.”

The private American Petroleum Institute (API) will post its weekly US oil inventories readings later today, ahead of the official Energy Information Administration (EIA) report due tomorrow. A Bloomberg survey suggested crude stocks lost 2.5 million barrels, while distillates added some 2 million barrels.

Last weeks official log revealed a 2.370 million-barrel draw for commercial crude oil inventories, gasoline inventories added 0.579 million barrels, while distillate fuels stockpiles levels increased by 0.227 million barrels.

Libya

Renewed fighting was reported at Tripoli airport last night, as rival armed groups committed rockets and other heavy weaponry to the battle.

The clashes at the airport erupted last week, leaving at least 7 people dead and some 30 injured, the BBC reported.

The Libyan government even proposed foreign peacekeepers be brought in to help stabilize the country.

“The government has studied the possibility to bring international forces to enhance security”, government spokesman Ahmed Lamine said at a press conference.

Various gangs and armed groups still control swathes of Libyan territory.

Meanwhile, Libyan rebels expressed their commitment to reopening the Es Sider port, the country’s biggest oil-exporting facility, the BBC reported yesterday. The group also disagreed with a fresh protest, which shut another port in Libya.

“This incident, in the port of Brega, has no impact on the agreement with the government to open Es Sider and Ras Lanuf,” said Ali al-Hasy, a spokesman for the self-declared Executive Office for the Barqa region, cited by Bloomberg. “We stand by the agreement with the government. Es Sider and Ras Lanuf will stay open.”

The country’s output was at 470 000 barrels per day, a spokesman for the state-run National Oil Corp (NOC) said on Sunday, after averaging 300 000 for the month of June, Reuters reported. Libya holds Africa’s largest crude reserves and has a potential output of some 4 million barrels per day.

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 $101.33, it probably will continue up to test $101.76. Should the second key resistance be broken, the US benchmark will most likely attempt to advance to $102.31.

If the contract manages to breach the first key support at $100.35, it will probably continue to drop and test $99.80. With this second key support broken, the movement to the downside will probably continue to $99.37.

Meanwhile, September Brent on the ICE will see its first resistance level at $108.25. If breached, it will probably rise and probe $108.78. In case the second key resistance is broken, the European crude benchmark will probably attempt to advance to $109.45.

If Brent manages to penetrate the first key support at $107.05, it will likely continue down to test $106.38. With the second support broken, downside movement may extend to $105.85 per barrel.