Crude oil trading outlook: WTI and Brent futures headed for minor weekly change, EU sanctions ahead

WTI futures were steady during early trade in Europe today, while Brent was slightly higher. Both contracts dropped yesterday, reversing earlier gains. The EU is expected to unveil the detailed list of new sanctions on Russian individuals and companies today.

WTI futures for September settlement stood at $102.08 per barrel at 6:49 GMT in New York today, up 0.01%. Prices ranged between $101.81 and $102.13 per barrel. The contract lost 1.09% on Thursday, erasing earlier gains for the week.

Meanwhile, Brent September contracts on the ICE in London traded at $107.22 per barrel, up 0.14%. Daily low and high were at $106.97 and $107.33 per barrel, respectively. Brents premium to WTI was at $5.14, after Thursdays closing margin of $5.00. The European contract lost 0.89% yesterday, also reversing gains from earlier this week.

“We did see a draw in crude inventory, but that just fed into larger stockpiles of gasoline, pointing to demand growth not being there,” Ric Spooner, chief strategist at CMC Markets in Sydney, said for Bloomberg. “Geopolitical events have come off the radar. The market has come to the conclusion that the risk of being caught out by building too much premium into prices probably outweighs the risk of not putting enough in.”

US supplies

The US Energy Information Administration (EIA) posted its weekly oil inventories report for the seven day through July 18 yesterday. The log revealed a 4 million-barrel draw for commercial crude oil inventories, while gasoline and distillates added 3.4 and 1.6 million barrels, respectively.

Meanwhile, oil at Cushing, Oklahoma, the delivery point for the NYMEX contract and the largest hub in the US, was reported at 18.8 million barrels for a 1.5 million-barrel draw.

WTI will probably advance next week, as shrinking crude supplies at Cushing support, according to a Bloomberg News survey.

Meanwhile, the US posted some key economic data yesterday. Initial jobless claims reached an eight-year low, while new home sales slowed more than expected and factories expanded not as quickly as before. Durable goods orders will be reported later today.

Ukraine

The US said on Thursday, that it has evidence of Russia firing artillery across the border on Ukrainian military positions. The statement added, that Russia intends to deliver more and more powerful weaponry to separatists.

The West has widely accepted that it was pro-Russian rebels, who shot down the Malaysian airliner last week, using a Buk surface-to-air missile, supplied by Russia.

The Kremlin has not yet commented on these particular accusations, but has so far denied all allegations in relation with the fighting in eastern Ukraine.

During the Crimean crisis, Russian President Vladimir Putin also frequently denied any Russian involvement, only to later admit that it was indeed Russian soldiers, who drove off the Ukrainian military and took control of the peninsula.

In separate developments, Ukrainian Arseniy Yatsenyuk resigned. It is not yet known if President Petro Poroshenko will accept the resignation.

Meanwhile, the EU is expected to unveil the expanded list of sanctioned entities today. The list will include 15 individuals and 18 companies. The measures are said to target Russian high-tech, energy and defense firms, in a move similar to that of the US last week.

Just hours before MH17 was shot down the US also widened the list of sanctioned entities. The list of companies included small-arms manufacturer Kalashnikov, Gazprombank, a leading Russian bank, as well as state-owned energy giant Rosneft.

Technical view

According to Binary Tribune’s daily analysis, in case West Texas Intermediate September futures breach the first resistance level at $102.96, they will probably continue up to test $103.85. Should the second key resistance be broken, the US benchmark will most likely attempt to advance to $104.39.

If the contract manages to breach the first key support at $101.53, it will probably continue to drop and test $100.99. With this second key support broken, the movement to the downside will probably continue to $100.10.

Meanwhile, September Brent on the ICE will see its first resistance level at $107.91. If breached, it will probably rise and test $108.75. In case the second key resistance is broken, the European crude benchmark will probably attempt to advance to $109.29.

If Brent manages to penetrate the first key support at $106.53, it will likely continue down to test $105.99. With the second support broken, downside movement may extend to $105.15 per barrel.