Thanks to strong data from the American Petroleum Institute, crude oil ended the day stronger yesterday and continues to rally this morning. Looking at the figures, crude inventories were much lower than expected and fell by -5.2m barrels (versus -3.8m barrels expected). This week, increases in distillate and gasoline stocks were also more measured, and were close to consensus estimates. While crude oil rallied on the news, gains in the commodity have been fairly limited. WTI began the day yesterday around $57.30 and is currently trading closer to $57.80. In other news, Forties pipeline operator Ineos expects to repair the pipeline within 2-4 weeks according to a report from Reuters. Crude gains have been capped by fears of surging US shale supply and extended speculator positioning in futures markets. Our medium-term outlook remains bullish.
WTI is currently trading just above $57.70. Brent crude is currently above $63.90.
Looking at US crude oil stocks, the most recent EIA figures (December 13) showed falling crude oil stocks and rising gasoline inventories. Crude oil inventories were lower than estimates (-5.1m vs. -4m expected). Gasoline stocks were up (+5.6m vs. +2.3m expected) while distillate stocks (-1.4m vs. +1.2m expected) were lower. Looking at reactions in markets, crude oil prices fell following the EIA report.
As crude oil falls after hitting recent highs, 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, note that both Brent and WTI are trading within a normal range.