Crude oil prices remain near their highs for 2017, and the commodity has been mostly flat for the last two days. According to a report by Reuters, traders claim that liquidity in the holiday season remains limited and trading has been subdued as a result. The crude oil bull market remains fundamentally supported as demand continues to grow faster than supply. While this remains true, the commodity is due for a short-term pull-back as prices run ahead of reality. This morning, Brent crude oil is looking overbought according to the Relative Strength Index on a weekly chart. Our medium-term outlook remains bullish.
WTI is currently trading just above $58.0. Brent crude is currently above $64.70.
Looking at US crude oil stocks, the most recent EIA figures (December 20) showed falling crude oil stocks and rising gasoline inventories. Crude oil inventories were lower than estimates (-6.5m vs. -3.8m expected). Gasoline stocks were up (+1.2m vs. +2.1m expected) while distillate stocks (+0.7m vs. -1m expected) were lower. Looking at reactions in markets, crude oil prices were mixed following the EIA report.
As crude oil continues to make gains from pipeline closures, we are upgrading the commodity to bullish. 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 Brent is looking overbought. WTI is trading within a normal range.