Crude oil is trading sideways today, after falling sharply yesterday. Yesterday, the prime culprit for crude oil weakness was strength in the US dollar. Over longer periods of time, crude oil and USD tend to be negatively correlated. In recent editions of the crude oil daily update, we have warned that the commodity is looking overbought on a daily chart and due for a short-term correction. The commodity continues to look overbought in the medium-term (on a weekly chart). Thanks to strong global demand and relatively weaker supply growth, the crude oil bull market remains intact. Our short-term and medium-term trending indicators suggest a bullish trend.
WTI is currently trading above $65.50. Brent crude is currently above $70.30.
Looking at US crude oil stocks, the most recent EIA figures (January 24) showed falling crude oil stocks and rising gasoline inventories. Crude oil inventories were lower than estimates (-1.1m vs. -2.0m expected). Gasoline stocks were up (+3.1m vs. +2.5m expected) while distillate stocks (+0.6m vs. -1.5m expected) were also up. Looking at reactions in markets, crude oil prices rose following the EIA report.