Crude oil prices are currently rallying. Both Brent and WTI are up by more than 2% today. Notably, Brent crude just made a new high for the year, while WTI has jumped above its short-term high of $71.38. WTI is currently trading at the top-end of last Friday's daily trading range. Looking at trading volumes, Brent futures volumes accelerated for the third week in a row, while WTI volumes were fairly week. Brent continues to outperform its US benchmark by a meaningful degree. Today's WTI trading range is $68.0 - $73.50.
Last Friday, crude oil prices moved lower after various media outlets reported that OPEC has been discussing increasing production by 500,000 barrels a day. Over the weekend, the OPEC Joint Technical Committee ended without any commitment to increase production. Moreover, both Saudi Arabia and Russia ruled out any immediate increase in crude oil production. Saudi Arabia's oil minister Khalid al Falih said that "I cannot speak to prices because I do not directly influence prices. What I can directly influence is ensuring that markets are well supplied, and that we will do today." Al Falih repeatedly emphasized that crude oil buyers remain well supplied, negating the need to increase production.
For now, OPEC and major producers including Russia appear to be calling President Trump's bluff. This is bullish for crude oil as supply continues to tighten. Over the longer term, slowing global growth and weakness across the commodity complex is likely to weigh on crude oil prices. As we discussed last Friday, the economic cycle remains the primary driver for commodities over the long term. Our outlook on crude oil remains neutral.
|September 21||Baker Hughes Oil Rig Count 21/SEP||866||867|
|September 25||API Crude Oil Stock Change 21/SEP||1.25M|
|September 26||EIA Crude Oil Stocks Change 21/SEP||-2.057M|
|September 26||EIA Gasoline Stocks Change 21/SEP||-1.719M|
|September 28||Baker Hughes Oil Rig Count 28/SEP||866|