Crude oil prices are lower today - Brent is currently selling off more sharply relative to WTI. Last week, the commodity traded in a narrow range. Few are willing to short crude oil with the question of Iranian sanctions lurking in the background. Last week's COT Report showed that speculators remain long to the tune of 750,000+ futures and options contracts. Net long positions in the commodity are currently hovering near all-time highs. While crude oil prices fell last Friday, volumes on down days have been lower relative to trading volumes on up days. This suggests that bears are not trading with conviction.
Turning to news, Secretary of State Mike Pompeo is currently touring the Middle East. He has met with Saudi King Salman in Riyadh and Israeli Prime Minister Benjamin Netanyahu. With regards to Iran, he said that the US remains concerned by Iran's "destabilizing and malign activities". Last week, French President Macron and German Chancellor Merkel failed to persuade Trump regarding the merits of maintaining the Iran nuclear deal. The President has claimed that former Secretary of State Tillerson was asked to leave over his desire to remain in the Iran nuclear deal. Based on recent developments, all signs point to the likelihood of Trump walking away from the Iran deal on May 12. Our short-term and medium-term outlook on crude remains bullish.
WTI is currently trading above $67.70. Brent crude is currently above $73.30.
Looking at US crude oil stocks, the most recent EIA figures (April 25) showed rising crude oil stocks and rising gasoline inventories. Crude oil inventories rose (+2.2m vs. -2.4m expected). Gasoline stocks were up (+0.8m vs. -1.0m expected) while distillate stocks (-2.6m vs. -1.7m expected) were down. Looking at reactions in markets, crude oil prices managed to strengthen following the EIA report.