Crude oil prices are currently slightly higher - both Brent and WTI are up today. Yesterday, crude oil prices moved up. The commodity was helped by US data which showed that the drop in crude inventories was smaller than expected. Once again, the official US EIA numbers diverged significantly from API figures announced earlier on Tuesday. Brent moved up to a greater degree relative to WTI, and continues to look overbought as it approaches $80/barrel. In a bullish trend, prices can continue moving higher even when looking overbought.
Looking at crude oil prices more broadly, the move up is a classic feature of a late-cycle market. While the outlook for economic growth is worsening in many regions (such as the Eurozone, Japan and in emerging markets), crude oil prices continue to rise thanks to supply concerns in producing countries such as Iran and Venezuela. While US production has increased by 27% since 2016, this has failed to dent the ongoing rally. Our only caveat regarding the ongoing bull market is that traders should wait for a better entry price before buying the commodity. Our short-term and medium-term outlook on crude remains bullish.
WTI is currently trading above $71.70. Brent crude is currently above $79.50.
Looking at US crude oil stocks, the most recent EIA figures (May 16) showed falling crude oil stocks and falling gasoline inventories. Crude oil inventories (-1.4m vs. -2.0m expected) were better than expectations. Gasoline stocks were down (-3.8m vs. -1.4m expected) while distillate stocks (-0.1m vs. -2.4m expected) were also down. Looking at reactions in markets, crude oil prices were higher following the EIA report.