Crude oil Daily Updates

25 October 2017

Crude oil remains strong, with both Brent and WTI rising in recent days. Crude prices rose yesterday following data from the American Petroleum Institute. API data showed gasoline and heating oil stocks falling sharply. While crude stocks have been falling in recent weeks, concerns were growing regarding a possible over-supply of refined products. Yesterday's data helps to dampen these concerns. Looking at news, Saudi Arabia has re-affirmed its commitment to taking Saudi Aramco public. Given the importance of Saudi supply, speculators will be closely following Saudi Aramco's IPO. 

WTI remains above $50, and is currently trading just above $52.0. Brent crude is currently above $58.0. After entering overbought conditions two weeks ago, crude oil is now trading within a normal range. 

Looking at US crude oil stocks, the most recent EIA figures (October 18) showed falling crude oil stocks and rising gasoline inventories. While crude oil inventories fell much more than expected (-5.731m vs. -4.1m barrels expected), gasoline stocks surged (+0.908m vs. +0.05m expected). US crude inventories have been falling for the past few weeks. Looking at reactions in markets, crude oil prices were steady following the EIA report.

Updated 
Short term outlook
Bullish

After strengthening on October 24, we are upgrading crude oil to bullish. Crude oil continues to rally on falling global inventories. While Brent looked overbought in mid-October, both WTI and Brent are now trading in normal conditions. This is based on technical indicators on the daily chart. 

Medium term outlook
Bullish

Thanks to ongoing crude oil strength, we are upgrading the commodity to bullish in the medium-term. Prices are rising as rude stocks continue to fall around the world, despite rising US exports that are driving concerns regarding future supply. Looking at various technical indicators on the weekly chart, crude oil is looking neither overbought nor oversold, but remains within normal trading conditions. 

Updated