Crude oil prices are mostly flat today - WTI is registering small gains while Brent is flat. As most markets are closed for Good Friday today, news relating to the commodity is fairly limited. The latest crude benchmark from Shanghai is now trading at par with WTI. Most traders have been shorting the benchmark price in Shanghai, as doubts grow regarding Chinese refiner demand. In its first week of trading, Shanghai crude prices have fallen by around 10%. Last year, China became the world's largest crude oil importer.
Beyond concerns regarding liquidity and the mechanics of the new contract, the Chinese crude benchmark is a lower quality relative to WTI and Brent. The Shanghai benchmark primarily trades medium-sulfur crude from the Middle East, while WTI and Brent are based on light crude. Our short-term outlook and medium-term outlook on crude oil is bullish.
WTI is currently trading above $64.80. Brent crude is currently above $69.30.
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.