API Reports Surplus, While WTI Awaits EIA Report - Calls Updated

API Reports Surplus, While WTI Awaits EIA Report - Calls Updated

WTI is trading at key resistance area at $41.5/barrel.

• In Financial Times organized, Global commodities Summit, most of the big oil traders such as Vitol, Trafigura, and Glencore, all sounded optimistic that oil price may have bottomed due to improved supply/demand balance.
• However, real focus is on Sunday, April 17th When OPEC and non-OPEC members will be meeting in Doha, Qatar for follow up discussion on production freeze decision.
• However, speaking to Bloomberg, Saudi crown prince indicated that there will no production freeze without members like Iran joining in. Iran is unlikely to join as its current production level is much lower than pre-sanction ones.
• On the other hand, Iraq has come out as vocal supporter of the freeze. Kuwait also joined in to control damage by suggesting production freeze can go ahead without Iran.
• Barclays and Goldman Sachs have warned that recent commodities rally isn’t riding on fundamental improvements and it could easily deteriorate if investors rush for exit.
• International Energy Agency (IEA) in its latest report cited freeze initiative and weaker Dollar behind oil rally suggested that price may have bottomed.
• American Petroleum Institute’s (API) weekly report showed inventory buildup of 6.223 million barrels.

• Our short term call to short WTI Crude at $39/barrel, after being initially in the money has been in loss as oil price jumped in expectation of freeze. Since outlook seems a bit clouded, it is better to sit out the Sunday meeting by booking as small loss as possible.