OPEC headquarters

Since the beginning of this week, Crude Oil prices has been declining gradually, reaching critical technical levels.

This is despite the fact that OPEC sent out few remarks to the media, speculating a possibility to extend the production cut deal, which expires in June of this year.

However, these remarks were not enough, Crude prices edged higher for a limited time only, before it continues to decline again later today.

One of the reasons behind the recent decline after OPEC member’s remarks, Russia stated clearly that they couldn’t rule out the participation in any extension of December deal, which means that tensions between OPEC and Non-OPEC members is likely to rise ahead of June.

No Catalyst To Support The Prices

We have been saying this over the past few months since Crude Oil prices were trading within a tight range since the beginning of this year.

There is no fundamental catalyst enough to support the prices above $50 barrier, whether in Brent or WTI Crude.

The prices need action and not remarks. This is exactly what happened back in January of last year when the prices were significantly low, OPEC noted that the members would meet to agree on freezing the production.

Yet, the deal came in 12 months after (December). Now they are probably doing the same thing. The prices are declining, and OPEC rushed to support through remarks to keep the hopes open for a possible action in the future. However, this time, it might be different.

US Crude Oil Inventories Ahead

During the US session ahead, eyes will be on the Crude Oil Inventories, which set to rise by 1.9M barrels last week, compared to a deficit of 0.2M barrels the week before.

Last week deficit was the first deficit after nine weeks of consecutive surplus. Yet, the deficit is just tiny, compared to the surplus of the past nine weeks.

API expects a build over 5 Million barrels, which might be more accurate. Over the past few weeks, API figures were more accurate, which keeps the risk higher for a possible build in today’s inventories figures.