Crude oil prices are down this morning, with both Brent crude and WTI falling. Despite the latest news that Saudi Arabia is looking to curtail exports in November, oil prices have failed to keep strengthening. Crude oil remains stuck in its trailing two-year range, as prices are capped by shale oil supply in the US. While demand growth is currently running ahead of supply, this is mostly due to OPEC supply cuts and growing demand from China. With China set to slow in the coming quarters and strong US shale oil growth continuing, oil prices appear to be stuck.
This morning, both Brent crude and WTI are down. WTI remains above $50, and is currently trading just above $50.46. Brent crude is currently above $56.20. After entering overbought conditions two weeks ago, 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.