Crude oil is once again making new highs this morning, and prices are at levels last seen in 2015. Both WTI and Brent continue to look overbought according to a range of technical indicators on daily and weekly charts. According to Reuters, speculative flows continue to drive crude oil to new highs. As we wrote in this week's take on the COT report, futures speculators continue to maintain substantial net long positions in the commodity. Some forecasters, such as the International Energy Agency, continue to believe that crude oil prices will be highest in the current quarter. According to the agency, the commodity is more likely to weaken in the coming quarters. For now, the crude oil bull market continues. Our short-term and medium-term trending indicators continue to suggest a bullish trend.
WTI is currently trading above $62.10. Brent crude is currently above $68.0.
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.
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.
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.