Oil Price Fundamental Weekly Forecast Demand Worries Capping Prices

U.S. West Texas Intermediate and international-benchmark Brent crude oil settled lower last week after touching lows not seen since early December. The move was further proof that the Middle East tension premium had been removed from the market. After hitting their lows for the week, buyers stepped in to stop the price slide and the markets nearly closed higher. The move suggests crude oil may have hit a value area on the charts.

While some support is being generated from the signing of the U.S.-China trade deal, the OPEC+ production cuts and a bigger than expected weekly inventory draw, perhaps keeping a lid on prices is a report from the International Energy Agency (IEA) that said it expected oil production to outstrip demand.

Last week,March WTI crude oilsettled at $58.58, down $0.41 or -0.70% andMarch Brent crude oilfinished at $64.85, down $0.13 or -0.20%.

In addition to the fundamental developments, technical factors also contributed to last weeks recovery with the market finding support following a test of a key 50% levels on the daily chart.

Last week, numerous factors contributed to the sluggish price action. There was no particular theme in the data releases, which leads us to believe prices will remain rangebound over the near-term unless there is another escalation of tensions in the Middle East.

Weekly U.S. Energy Information Administration Weekly Inventories Report

On Wednesday, theU.S. Energy Information Administration (EIA) reportedthat oil inventories fell by 2.5 million barrels during the week-ending January 10. Traders were looking for a draw of 500,000 barrels. Inventory now stands at 428.5 million barrels.

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