Oil Price - Jan 25

[dan_s]

U.S. crude oil inventories rose by 2.84 million barrels at the end of last week, almost in line with the expected gain of 2.85 million barrels the Energy Information Administration (EIA) said on Wednesday, in line and below the 2.9 million barrels reported on Tuesday by the American Petroleum Institute (API).

Gasoline inventories rose by 6.8 million barrels and distillate supplies fell 4 million barrels, EIA said.

Crude prices have mostly held gains this week on widespread agreement a coordinated pact between OPEC and non-OPEC nations to trim 1.8 million barrels-per-day (bpd) from global output is working as well and as dips in the dollar index to seven-week lows that benefit buyers in currencies other than greenbacks.

Futures have traded in a narrow range around the low $50s over the past month as sentiment in oil markets has been torn between expectations of a rebound in U.S. shale production and hopes that oversupply may be curbed by output cuts announced by major global producers. The dollar index fell 0.35% on Wednesday to 99.92.
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MY TAKE:
As I have been saying for the last six weeks > OIl prices will probably flop around in a tight range of $50-$55.
I am using WTI $52.50/Bbl for the first quarter in all of my forecast/valuation models. It will take several months before crude oil inventories in the U.S. start to see the impact of the OPEC + Russia production cuts.
If cuts of 1.5 MMBbls per day are confirmed by falling OECD inventories, I predict that WTI will move to $60/Bbl by June and then ramp higher as demand for oil always increases in the summer months (see the chart at https://www.iea.org/oilmarketreport/omrpublic/ )

[dan_s]

This is bullish for crude oil pricing: http://www.marketwatch.com/investing/index/dxy/charts