Brent crude oil is higher this morning and has breached $65 per barrel for the first time since 2015. Reuters is reporting that the North Sea's Forties Pipeline has to be shut down "for a number of weeks" after cracks were found. The pipelines have a capacity of moving 450,000 barrels per day and are a significant component of the Brent crude benchmark. WTI is also higher on the news, and is currently trading above $58. Given the ongoing crude oil bull market, supply disruptions have had an outsized impact on crude oil prices. The recent closure of the Keystone XL pipeline strengthened WTI in late November. Our medium-term outlook based on trending indicators remains bullish.
WTI is currently trading just above $58.30. Brent crude is currently above $65.20.
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 rebounds on OPEC expectations, we are upgrading the commodity to bullish in the medium-term. Looking at various technical indicators on the weekly chart, note that Brent is looking overbought. WTI is trading within a normal range.