Crude oil prices are mostly flat today, after strengthening last week. Earlier in the day, crude oil was trading higher but has since given up most of its gains. Over the weekend, Saudi Arabian oil minister Khalid al-Falih stated that January-March production would be below output caps, with total exports less than 7 million barrels per day. OPEC is looking to relax production limits next year while keeping crude oil prices supported. “A study is taking place and once we know exactly what balancing the market will entail we will announce what is the next step. The next step may be easing of the production constraints,” he said at an event in New Delhi. Looking at US data, the number of new oil rigs rose by just one rig last week. Rising US supply remains the most-watched threat to the ongoing crude oil bull market. Turning to the US dollar, the currency has been selling off today. So far, crude oil benchmarks are mostly flat despite help from a weaker USD. Our short-term outlook is neutral, while our medium-term outlook on crude remains bullish.
WTI is currently trading above $63.50. Brent crude is currently above $67.20.
Looking at US crude oil stocks, the most recent EIA figures (February 22) showed falling crude oil stocks and rising gasoline inventories. Crude oil inventories were much lower than estimates (-1.6m vs. +2.5m expected). Gasoline stocks were up (+0.3m vs. -0.5m expected) while distillate stocks (-2.4m vs. -1.5m expected) were down. Looking at reactions in markets, crude oil prices were up following the EIA report.