Crude oil prices are slightly lower today - both WTI and Brent are selling off. Yesterday, the commodity failed to break out despite better than expected inventory figures from the US EIA. While API figures suggested a significant increase in crude stocks, EIA data suggested a more moderate pace of increases. While crude oil benchmarks initially rose following the announcement, the commodity gave up its gains as the US dollar strengthened and risk sentiment worsened.
Looking at latest news, Shanghai's crude oil benchmark remains very volatile. Today, the Chinese benchmark prices is trading closer to WTI. Shanghai crude futures represent 3% of the combined WTI/Brent volumes since March. As China is the world's largest crude oil importer, traders expect the Shanghai benchmark to grow in importance over time. For now, significant questions remain regarding Chinese yuan convertibility and trading hours associated with the benchmark. Our short-term outlook and medium-term outlook on crude oil is bullish.
WTI is currently trading above $64.50. Brent crude is currently above $68.60.
Looking at US crude oil stocks, the most recent EIA figures (March 28) showed rising crude oil stocks and falling refined product inventories. Crude oil inventories were higher than estimates (+1.6m vs. +0.9m expected). Gasoline stocks were down (-3.5m vs. -2.3m expected) while distillate stocks (-2m vs. -1.5m expected) were also down. Looking at reactions in markets, crude oil prices strengthened following the EIA report.