Crude oil prices moved sharply lower yesterday thanks to the recent downturn in US stock markets. As investors reduced their exposure to risk, riskier assets such as crude oil weakened against safe havens such as the US dollar. Today, crude oil is currently flat. Whether or not the short-term correction continues will be determined by how the stock market performs today. As momentum in crude oil pauses, we are likely to downgrade our short-term outlook on the commodity to neutral in the coming days. The recent sell-off combined with seasonal factors is weighing on crude prices. In the medium-term, we remain bullish on crude oil as demand growth continues to accelerate relative to supply. Our short-term and medium-term trending indicators suggest a bullish trend.
WTI is currently trading above $63.60. Brent crude is currently above $67.0.
Looking at US crude oil stocks, the most recent EIA figures (January 31) showed rising crude oil stocks and falling gasoline inventories. Crude oil inventories were much higher than estimates (+6.8m vs. -0.5m expected). Gasoline stocks were down (-2.0m vs. +1.9m expected) while distillate stocks (-1.9m vs. -1.3m expected) were also down. Looking at reactions in markets, crude oil prices rose following the EIA report.