On Tuesday, the American Petroleum Institute released its weekly count indicating that U.S. crude inventories increased by 7.3 million barrels last week, significantly higher than the expected 1.2 million barrels.
Not much reaction was viewed on Oil prices even though some pressure was observed upon the release.
However, a more detailed fundamental analysis on the Oil market follows.
US Oil giants Exxon Mobil and Chevron Corp
Strong production forecasts have been released by US Oil giants Exxon Mobil and Chevron Corp that amaze market followers and potential investors.
The two Oil rivals operate within in the West Texas and New Mexico field and with the new production expectations looming, they could act as direct competition to one another.
The competition and forecasts could uplift them both to a front runner in the US Oil industry, in the next years.
Expectations released by Chevron Corp indicate an increase of 59 percent of current production levels reaching approximately 600,000 barrels per day with that figure increasing by over 30 percent by 2023, with a steady production rise of 3 percent to 4 percent annually.
Both Exxon and Chevron have taken actions towards achieving faster cash flows by investing in shale oil producing rather than the traditional methods of Oil extraction of the past.
Chevron Chief Executive also referred to Venezuela, where Chevron is still in operation there, stating they are facing obstacles from U.S. sanctions.
He affirmed Chevron employees are in good hands and that the company has taken a strategic long-term view on the geopolitical matters of the country indirectly implied they have a plan in mind with various scenarios included.
From a more generic perspective US oil firms are making adjustments to the way they operate in an attempt to win back investors.
China planning energy market restructuring
The Oil sector in the US has disappointed in the previous years, with energy shares in the S&P 500 index dropping to 6 percent in 2018, from 8.4 percent four years earlier.
On another front, reports from China said the country is planning a huge energy market restructuring.
The Mainland’s intensions are to create a national oil and gas pipeline set, uniting the long-distance pipeline assets of the country’s state-owned energy companies.
The restructuring is aimed towards giving access to China’s pipeline infrastructure to private and foreign energy producers, in order to stimulate oil and gas exploration.
The open pipeline network will give the advantage to companies to concentrate on exploration activities without any additional transportation costs to move the fuel in the market.
Chinese companies have been making preparations for the move, including PetroChina which is said to have moved its pipeline segment’s management team to a separate office tower in Beijing.
Oil Market in Middle East
From the Middle East, Saudi Arabian Oil giant Aramco has increased its April price for its Arab Light grade aimed at Asian clients, by $0.50 a barrel.
This comes after Dubai price spread widened by 30 cents a barrel in February compared with the previous month.
Prices for future months had been uplifted, due to stronger demand for spot Oil.
Furthermore, prices could have been affected by a temporary suspension of the world’s largest oilfield, Safaniya, which produces heavy Saudi crude.
Yet, Saudi Aramco’s chief executive confirmed on Tuesday that the oilfield restarted its operations.
As a conclusion, it could be a bumpy ride for Oil prices this week as oil analysts and traders expect updates on the US Sino matter which could reach a trade agreement, prior to deciding on the direction of crude Oil, while the upcoming EIA weekly figure release later in the US session today, could create volatility for the commodity.
WTI Crude Oil Technical Analysis
Crude Oil moved higher this week after the news that OPEC confirmed cutting production.
If the bullish trend continues we may see the commodity breaking above 56.52 (R1) resistance level and aiming higher for the 58.49 (R2) resistance barrier.
An ultimate bullish scenario could send the commodity above the 60.30 (R3) resistance level.
In the opposite scenario a bearish sentiment could sent the commodity below our 54.82 (S1) support level and from their dropping lower for the 53.93 (S2) support barrier.
Even lower crude could aim for the 53.00 (S3) support hurdle.
Please note today, at 15:30 (GMT) the EIA will be releasing its weekly figure and could create volatility for Oil prices.