Crude oil continues to move up sharply, although the commodity is taking a breather today. Crude is currently trading at its highest levels since 2015. According to a recent Reuters report, a Saudi official has described the recent domestic purge as "phase one" of a broader crackdown. The country has also accused Iran of escalating tensions after a missile was fired towards Riyadh from Yemen. Saudi Arabia and Iran are currently supporting opposite sides in the ongoing civil war in Yemen. As instability in the Middle East appears to be worsening, crude oil is trading higher on concerns regarding supply disruptions. Looking at technicals, both WTI and Brent look fairly overbought in the short-term timeframe, and the commodity is thus susceptible to a pullback.
WTI is currently trading just above $57.20. Brent crude is currently above $64.0.
Looking at US crude oil stocks, the most recent EIA figures (November 1) showed falling crude oil stocks and gasoline inventories. Crude oil inventories fell, but were higher than expectations (-2.4m vs. -2.5m expected). Gasoline stocks were down (-4.0m vs. -1.6m expected) and distillate stocks (-0.3m vs. -2.1m expected) were also down. US crude inventories have been falling for the past few weeks. Looking at reactions in markets, crude oil prices fell following the EIA report.
Thanks to ongoing crude oil strength, we are upgrading the commodity to bullish in the medium-term. Prices are rising as crude 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, both Brent and WTI are looking overbought.