Crude oil prices continue fluctuating between small gains and losses on Tuesday. Brent is seeking to regain the key $63 handle, but so far fails to resume its recent Forties-inspired rally. Only a decisive break above this level will alleviate immediate downside pressure and open the way to the intermediate resistance at $63.80 and then to $64 a barrel.
The continuing concerns over supply disruption on the back of the Forties pipeline outage in the North Sea keep oil prices afloat, though the broad-based US dollar weakness is also somehow supportive. The Forties pipeline operator Ineos today reported that the timescale for repairs remains around two to four weeks starting from the date of shutdown (Dec. 11). It means that, barring some shock from the US, prices may stay elevated at least till the end of this year.
Meanwhile, in the short-term the market will focus on the US data. Today, the US API crude inventory data release will set the tone. If the report shows that the massive build in gasoline inventories has slowed last week, and crude oil stockpiles decreased for a fifth week in a row, Brent will stage a more robust recovery towards the $64 handle.
Senior Analyst at Capital Markets