Crude oil trading outlook: WTI futures look to weekly gains, Brent falls

WTI and Brent futures were little changed during early trade in Europe today, as investors look to US GDP data to steer final moves this week. Ample crude supplies and lackluster demand still rule the markets, though, and a bearish trend for a considerable time seems at hand.

WTI futures for November delivery on the New York Mercantile Exchange traded at $92.52 per barrel at 6:59 GMT today, down 0.01% for the day. Prices had ranged from $92.43 to $92.65 per barrel. The US benchmark is on track to settle the week ~1% higher.

Meanwhile on the ICE in London, November Brent stood at $97.09 per barrel, up 0.09%, with prices between $96.90 and $97.15 per barrel. The contract’s premium to its US counterpart widened to $4.57. The European brand is headed for a ~1.3% weekly decline.

A key reading on the US economy is due later today, and investors look to it to gauge oil demand outlooks in the worlds top oil consuming economy. Final GDP figures for the second quarter of 2014 are due to show the US economy, which accounts for 21% of total oil demand, has expanded at a 4.6% annual rate, beating preliminary readings.

More positive economic data on housing, durable goods orders and jobless claims further supported outlooks for the US economy, but also strengthened the dollar. A pricier US currency depletes the investment appeal of all dollar-denominated commodities, such as oil, making them more expensive to holders of other currencies.

Meanwhile, surprise draws at US crude inventories proved quite supportive earlier this week. The EIA report, which covers the week through September 19th, revealed crude stocks had lost 4.3 million barrels, as compared with expectations of a 0.7m-1m draw. The draw also marks the 14th weekly decrease out of 17, and is the biggest weekly decrease since mid-July.

Production of crude logged a minor increase, however, to set a new highest level for the past 28 years at 8.867 million barrels per day, signaling that ample supplies will be weighing on contracts for a considerable time.

Oil production is indeed ramping up worldwide.

Middle East, OPEC

The broadening of action against ISIS was thought to widen the risk premium in crude prices, but it has so far failed to spook markets. Investors seem to regard the actions as positive for the security of the region.

Meanwhile, Iraq, OPEC’s second-top oil exporter and the most-hurt by ISIS country, actually logs increasing outbound shipments. Libya, also an OPEC member, also clocks soaring production after operations at its largest oilfield were resumed.

The growth in OPEC production adds to ample global supplies, which weighed on prices recently. Earlier this month, both the International Energy Agency (IEA), which consults developed nations on oil, and OPEC lowered projections of crude demand next year.

The forecasts produced speculation of an imminent OPEC output cut, as traders expect the cartel to move in the defense of the key $100 per barrel price level.

OPEC official moved to dispel speculation about a cut, but the group did lower its marketable oil expectations for 2015, signaling a decrease in production could follow as to meet market demand.

Technical support and resistance levels

According to Binary Tribune’s daily analysis for Monday, West Texas Intermediate November futures’ central pivot point is at $92.71. In case the contract breaches the first resistance level at $93.36, it will probably continue up to test $94.20. Should the second key resistance be broken, the US benchmark will most likely attempt to advance to $94.85.

If the contract manages to breach the first key support at $91.87, it will probably continue to drop and test $91.22. With this second key support broken, movement to the downside will probably continue to $90.38.

Meanwhile, November Brent’s central pivot point is projected at $96.93. The contract will see its first resistance level at $97.63. If breached, it will probably rise and test $98.27. In case the second key resistance is broken, the European crude benchmark will probably attempt to advance to $98.97.

If Brent manages to penetrate the first key support at $96.29, it will likely continue down to test $95.59. With the second support broken, downside movement may extend to $94.95 per barrel.

Do you think US GDP figures will significantly impact crude prices?

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