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U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are under pressure on Tuesday as investors continue to react to expectations of lower demand due to a weakening global economy. On Tuesday, the markets fell in reaction to weak manufacturing data from Europe. Today, it’s weak manufacturing data from Japan that is helping to keep a lid on prices.
At 09:54 GMT, November WTI crude oil is at $56.14, down $0.50 or -0.84% and December Brent crude oil is trading $63.05, down $0.68 or -1.07%.
The reports of sluggish manufacturing from Europe and Japan are somewhat offsetting the uncertainty around supply disruptions in Saudi Arabia.
The price action, however, indicates buyers and sellers could be at a short-term stalemate that could lead to further sideways price action.
On the supportive side, oil prices remained at comparatively elevated levels for the year in the wake of the September 14 attack on Saudi Arabia’s largest oil progressing facility that halved output in the world’s top oil exporter.
Furthermore, the Wall Street Journal reported on Monday that repairs at the plants could take months longer than anticipated.
On the bearish side, Reuters reported that Saudi Arabia has restored more than 75% of crude output lost after the attacks on the facilities and will return to full volumes by early next week.
Analysts at Nomura, however, are expressing legitimate concerns that are likely being shared by many traders, which may be contributing to the sideways trade.
“Nine days after the oil facility attack in Saudi Arabia (SA), we still see divergent market views on when the damaged supplies will be restored,” analysts at Nomura said in a note.
“While the damaged plants may be repaired in the next couple of weeks, increasing actual supplies may require monitoring.”
Daily Forecast
We could be looking at a sideways trade on Tuesday if traders continue to express doubts about the progress of the repairs.
Prices could find support if there are reports of any delays in the reports. Contrarily, prices could weaken if the repairs jump ahead of schedule.
The American Petroleum Institute (API) weekly inventories report at 20:30 GMT could ultimately settle the tie.
A preliminary Reuters poll found on Monday that U.S. crude oil and distillate stockpiles were expected to have dropped the week-ending September 20. Seven analysts polled by Reuters estimated, on average, that crude inventories fell 800,000 barrels in the week to September 20.
This article was originally posted on FX Empire