Crude oil prices surged yesterday on news that Saudi Arabia was looking to curtail exports in November. OPEC and other crude exporters have been keeping 1.8m barrels per day off the market in an effort to reduce oil inventories. Recent data also showed that 85% of US oil output in the Gulf of Mexico remains offline, after Hurricane Nate blew threw the region. We have upgraded our short-term outlook on crude oil to bullish accordingly. Our medium-term outlook remains neutral.
This morning, both Brent crude and WTI are up. WTI is now above $50, and is currently trading just above $51.10. Brent crude is currently above $56.70, having weakened down to $55.50 last Friday. After entering overbought conditions earlier this week, crude oil is now trading within a normal range.
After rising sharply on October 10, we are upgrading crude oil to bullish. Saudi Arabia recently committed to reducing exports in November while significant US offshore production remains offline. We earlier warned that crude oil looked overbought in the last week of September, based on various technical indicators when looking at a daily chart. Since then, the commodity has returned to normal trading conditions.
After running out of momentum following its recent peak on September 25, we are downgrading crude oil to neutral. The referendum in Kurdish Iraq has failed to ignite the commodity, while US oil production and exports continue to grow following Hurricane Harvey. While oil stocks around the world continue to fall, this has had a limited influence on prices in the last few weeks. Looking at various technical indicators on the weekly chart, crude oil is starting to look overbought, but remains within normal trading conditions.