Global crude oil benchmarks slid sharply yesterday following data from the US Energy Information Administration. Rising inventories of refined products such as gasoline is driving concerns that end-user demand is weakening. The crude oil market has enjoyed a bull market since last summer as demand growth has consistently run ahead of supply growth. The latest figures from the EIA is raising doubts regarding the continuation of this trend. Beyond demand concerns, US crude production continues to reach new heights. The latest numbers show December production running at the rate of 9.7m barrels per day. We have downgraded our short-term outlook on crude to neutral following yesterday's price action.
WTI is currently trading just above $55.80. Brent crude is currently above $61.20.
Looking at US crude oil stocks, the most recent EIA figures (December 6) showed falling crude oil stocks and rising refined inventories. Crude oil inventories were lower than estimates (-5.6m vs. -3.5m expected). Gasoline stocks were up (+6.8m vs. +1.9m expected) while distillate stocks (+1.7m vs. +1.2m expected) were also up. Looking at reactions in markets, crude oil prices fell following the EIA report.
As crude oil pulls back following the OPEC event and US data, we are downgrading the commodity to neutral. Note that both Brent and WTI are now trading within a normal range. This is based on technical indicators on the daily chart.
As crude oil rebounds on OPEC expectations, we are upgrading the commodity to bullish in the medium-term. Looking at various technical indicators on the weekly chart, both Brent and WTI are trading within a normal range.