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Crude oil slightly higher following recent weakness

Crude oil daily update

BY DEB SHAW | 

Crude oil daily update

Crude oil prices are currently slightly higher. Both Brent and WTI are currently up by about 0.50%. Yesterday, both benchmarks ended the day slightly lower. Trading volumes in Brent futures markets remain elevated when compared to 30-day averages, and accelerated relative to the previous session. On the other hand, trading in WTI futures remains fairly light, and decelerated yesterday. Today's WTI trading range is $67.70 - $72.30. 

Looking at recent developments, President Trump criticized OPEC in a tweet yesterday. Specifically he said that "The OPEC monopoly must get prices down now!" While crude oil prices rallied after Saudi Arabia signaled its comfort with Brent prices above $80/barrel earlier this week, the commodity fell after Trump's latest tweet. As crude oil is a volatile asset, the commodity can react sharply to political headlines in the short-term. 

Over the longer term, the dominant driver behind crude oil prices remains the economic cycle and supply/demand dynamics. While many expected OPEC to ease production limits at its upcoming meeting in Algeria, these expectations are now in doubt following Saudi Arabia's latest comments. Historically, changes in OPEC production have lagged price action by quite a few quarters. For example, the OPEC/Russia supply cut deal was only implemented following a significant bear market in crude oil (December 2016). Our outlook on crude oil remains neutral. 

Date Event Actual Previous
September 14 Baker Hughes Oil Rig Count 14/SEP 867 860
September 18 API Crude Oil Stock Change 14/SEP 1.25M -8.636M
September 19 EIA Crude Oil Stocks Change 14/SEP -2.057M -5.296M
September 19 EIA Gasoline Stocks Change 14/SEP -1.719M 1.25M
Updated 
Outlook
Bearish

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