U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower on Wednesday shortly before the release of the government’s weekly inventory numbers at 15:00 GMT. The report is being released a day later than usual because of Monday’s U.S. Labor Day holiday and 30 minutes later in the day due to the release of the government’s weekly natural gas storage report.
Oil prices started out higher with U.S. crude output still largely offline after Hurricane Ida while the spread of the coronavirus Delta variant continues to cloud the demand outlook. But the markets turned lower after China announced it was going to auction off state crude oil reserves for the first time.
New Supply Data
Late Wednesday, the American Petroleum Institute (API) reported a crude drawdown for the week-ended September 3 was smaller than expected in a Reuters poll, but gasoline and distillate drawdowns were bigger than expected.
Meanwhile, the U.S. Energy Information Administration (EIA) is expected to announce that U.S. crude oil production will fall by 200,000 in 2021 to 11.08 million bpd. The EIA also said that Hurricane Ida should force a bigger decline than its previous forecast for a drop of 160,000 bpd.
The EIA also cut its 2021 global oil demand growth forecast, with little change to its 2022 estimate.
China to Auction Off State Crude Oil Reserves to Help Refiners
China’s state reserves administration said on Thursday it would release crude oil reserves to the market via public auction to ease the pressure of high feedstock costs on domestic refiners.
The release, described as a first, will be made in phases and is mainly for integrated refining and chemical plants, the National Food and Strategic Reserves Administration said in a statement. That potentially rules out the participation of smaller, independent refiners known as “teapots” in the bidding.
The move will “better stabilize domestic market supply and demand and effectively guarantee the country’s energy security,” the administration added, without specifying the volume of crude it would sell.
It’s going to be hard for the EIA report to offset the bearish news from China. However, the news from China is not bearish enough to offset the lingering concerns over the production outages caused by Hurricane Ida.
The offsetting fundamental news likely means prices will remain near or inside the short-term retracement zone at $66.86 to $68.22. Trader reaction to this zone will determine the near-term direction of the WTI futures contract.
The direction of the November Brent futures contract will be determined by trader reaction to $70.12 to $71.44.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
More From FXEMPIRE:
This post was originally published on *this site*