WTI Crude Oil

Brent Crude Oil

Crude oil

Crude oil is an unrefined petroleum product made from hydrocarbons, and is the world's leading source of energy. The world's top five crude oil exporters include Saudi Arabia, Russia, Iraq, Canada, and the United Arab Emirates. Two-thirds of all oil contracts reference the Brent Blend, which originates from four different fields in the North Sea. West Texas Intermediate (WTI) refers to oil extracted in the US and sent via pipelines to Cushing, OK. WTI is primarily traded in the US. 

Outlook
Neutral

Daily update

Crude oil prices are currently recovering. Both WTI and Brent crude oil are currently moving higher. Yesterday, both benchmarks fell sharply following a significant deterioration of risk sentiment across financial markets. While trading volumes in WTI futures decelerated relative to the previous session, note that Brent futures volumes were both higher than the previous session and relative to 30-day averages. This suggests that traders sold Brent with conviction yesterday (but the same cannot be said for WTI). Today's WTI trading range is $67.40 - $75.80. 

Looking at recent fundamental developments, Chinese demand for crude oil appears to be stable despite slowing growth in the world's largest crude oil importer. According to Chinese government data, refinery throughput accelerated to 12.49 million barrels per day last month as independent refineries resumed operations. Beyond demand from independent refiners, data from Refinitiv Eikon suggests that large volumes of Iranian crude oil are likely to arrive in China this month and in November. While Chinese GDP growth continues to decelerate, crude oil demand from the country appears to be stable for now.  

Beyond data regarding Chinese demand, there are no fundamental developments driving the commodity today. Following a significant sell-off earlier this week, we will downgrade our outlook on crude oil to neutral later today. Over many recent editions of the crude oil daily update, we have remarked that the commodity continues to diverge from both (1) broader trends in global growth and (2) trends seen in the commodity complex. As commodities as an asset class continue to weaken while the US joins the global slowdown, crude oil prices are likely to remain under pressure. We derive our crude oil outlook based on trends in price momentum, trading volumes and changes in underlying volatility. Our outlook on crude oil is now neutral. 

Date Event Actual Previous
October 12 Baker Hughes Oil Rig Count 12/OCT 869 861
October 16 API Crude Oil Stock Change 12/OCT -2.1M 9.75M
October 16 EIA Crude Oil Stocks Change 12/OCT 6.49M 5.987M
October 16 EIA Gasoline Stocks Change 12/OCT -2.016M 0.951M
October 19 Baker Hughes Oil Rig Count 19/OCT 869
Updated 

Crude oil Outlook

Outlook
Neutral

Updated 

Analysis

On August 10, we downgraded our outlook on WTI from neutral to bearish thanks to a significant deterioration of the trend. We determine trends for a number of major currencies and commodities based on price, trading volumes and changes in volatility. Following WTI’s latest top at $75.37/barrel, sell-offs in the commodity have been accompanied by accelerating trading volumes. This is a...

Published 
Tags: Crude oil

US Oil production may be accelerating, but crude oil remained a strong commodity throughout 2017. However, as supply growth is showing signs of catching up with demand growth - what does this mean for the crude oil forecast in 2018 and beyond?

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Tags: Crude oil

Looking at the latest Commitments of Traders report, bullish extremes continue in long crude oil, long British pound and long euro speculator net positions. While long crude oil and British pound positions have grown, long euro positions have fallen this week. The purpose of this report is to track how the consensus is positioned across various currencies and commodities. When net long positions…

Published 
Tags: Crude oil