All Eyes on the EIA Report
Today’s EIA report, due to be released at 15:30 GMT, is expected to show a build of 1.3 million barrels of crude. Last week, the agency reported a 2.3 million barrel decline. Over the past five years, this time period has shown an average increase of 3.1 million barrels.
Ahead of the EIA data, the news wasn’t particularly bullish for oil prices, in fact, it was outright bearish, with the American Petroleum Institute (API), late Tuesday, reporting a massive 11.43 million barrel surge in U.S. oil stockpiles. While geopolitical issues have underpinned prices for weeks, perhaps capping gains have been concerns over huge inventory gains as global supply continues to exceed demand.
Iran Keeps the Risk Premium Alive
Despite today’s early setback, WTI crude oil remains well supported by speculators and hedgers reacting to the threat of military activity between the United States and Iran that could disrupt supply from the Middle East.
According to reports, the two countries will meet again on Thursday in Geneva, Switzerland, to discuss Iran’s nuclear program. The U.S. wants to shut it down, while Iran argues it has a right to have nuclear facilities that produce weapons grade uranium. The U.S. has a naval force in place off the coast of Iran as it tries to force the nation to halt its nuclear and ballistic missile programs.
Last night President Trump, in his State of the Union address, said he would not allow a country like Iran, which he described as the world’s biggest sponsor of terrorism, to have a nuclear weapon, Reuters reported. This comment was enough to keep the risk premium intact for the most part, but was not powerful enough to encourage new buying.
