Crude oil prices are currently slightly lower - both Brent and WTI are selling off today. Yesterday, WTI prices moved lower while Brent ended the day flat. After moving into overbought territory on Tuesday, crude oil prices continue to weaken. Looking at WTI, support ($70) and resistance ($73) remain at similar levels. For Brent, support is around ($77.50) and resistance is above $80/barrel.
Turning to recent developments, US crude oil inventories were much larger than expectations. While crude oil prices were slightly weaker following the news, reactions have been fairly limited considering the size of the miss. The concern that OPEC may announce an increase in supply at its upcoming meeting in June is another factor weighing on prices.
On the positive side, Libya cut oil production by around 120,000 barrels per day due to power issues brought about by hot weather. There are also rumors that China is likely to start buying a significant amount of US crude thanks to ongoing US-China trade tensions. All things considered, crude oil prices are likely to keep strengthening as supply remains a bigger factor relative to demand concerns. Our short-term and medium-term outlook on crude remains bullish.
WTI is currently trading above $71.50. Brent crude is currently above $79.40.
Looking at US crude oil stocks, the most recent EIA figures (May 23) showed rising crude oil stocks and rising gasoline inventories. Crude oil inventories (+5.8m vs. -2.0m expected) were much worse than expectations. Gasoline stocks were up (+1.9m vs. -1.4m expected) while distillate stocks (-1.0m vs. -1.5m expected) were down. Looking at reactions in markets, crude oil prices were lower following the EIA report.