Crude oil is taking a breather this week after rising sharply last week. We warned yesterday that both WTI and Brent crude prices are in short-term overbought territory, and this continues to be the case today. While bond yields fell yesterday on the news that US tax cuts are likely to be phased in over time, there was no reaction in crude trading. Given the upcoming OPEC meeting in Vienna at the end of the month, optimism for supply cuts continues to drive crude prices.
WTI is currently trading just below $54.0. Brent crude is currently below $60.40. Both WTI and Brent crude are now looking overbought in the short-term. While this does not suggest an imminent pullback, it does suggest caution going forward.
Looking at US crude oil stocks, the most recent EIA figures (October 25) showed falling crude oil stocks and rising gasoline inventories. While crude oil inventories unexpectedly rose (+0.86m vs. -2.49m expected), gasoline stocks (5.46m vs. -1m expected) and distillate stocks (-5.2m vs. -0.5m expected) were down sharply . US crude inventories have been falling for the past few weeks. Looking at reactions in markets, crude oil prices were steady following the EIA report.