Crude oil prices are currently flat following two weak sessions for the commodity. Markets were taken by surprise yesterday after US crude stockpiles grew faster than consensus estimates, according to EIA data. The commodity sold off following the news, and continued to weaken thanks to a rebounding US dollar (crude oil tends to trade inversely to the dollar). Crude oil prices are under threat from both supply and demand concerns. On the supply side, accelerating US production (currently at multi-decade highs) is a significant headwind for the commodity. While OPEC supply is at a 10-month low, the market remains focused on the US. On the demand side, poor economic data from Asia is raising concerns regarding demand growth in fast-growing regions such as China. Crude oil is also suffering as global risk sentiment retreats following a significant sell-off in early February. Our short-term outlook is neutral, while our medium-term outlook on crude remains bullish.
WTI is currently trading above $61.30. Brent crude is currently above $64.40.
Looking at US crude oil stocks, the most recent EIA figures (February 28) showed rising crude oil stocks and gasoline inventories. Crude oil inventories were higher than estimates (+3.0m vs. +2.8m expected). Gasoline stocks were up (+2.5m vs. -0.8m expected) while distillate stocks (-1.0m vs. -1.0m expected) were down. Looking at reactions in markets, crude oil prices fell following the EIA report.