Crude oil Daily Updates

05 January 2018

Crude oil prices are slightly lower this morning after making new highs yesterday. As we wrote yesterday, crude prices are close to their best levels since late 2014. Yesterday's EIA figures, which showed crude stocks falling faster than expected, did not have a significant impact on crude oil benchmarks. The data was overshadowed by the fact that refined product inventories (distillates and gasoline) continue to soar. Looking at technical indicators, both WTI and Brent are looking overbought on a daily and a weekly chart. Last week, we wrote that speculator sentiment based on futures data is also becoming fairly one-sided. Despite the fact that our short-term and medium-term trending indicators are signaling a bullish trend, we continue to believe that crude oil is due for a short-term pullback. 

WTI is currently trading above $61.80. Brent crude is currently above $67.80.   

Looking at US crude oil stocks, the most recent EIA figures (January 4) showed falling crude oil stocks and rising gasoline inventories. Crude oil inventories were lower than estimates (-7.4m vs. -5.4m expected). Gasoline stocks were up (+4.8m vs. +2.3m expected) while distillate stocks (+8.9m vs. +0.3m expected) were also up. Looking at reactions in markets, crude oil prices were mixed following the EIA report.

Updated 
Short term outlook
Bullish

As crude oil continues to make gains from pipeline closures, we are upgrading the commodity to bullish. Note that both WTI and Brent are looking overbought. This is based on technical indicators on the daily chart. 

Medium term outlook
Bullish

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 looking overbought. 

Updated