Crude oil prices were unable to maintain their 2014 highs yesterday. Looking at Brent, prices faced resistance above $70 and fell to $69. Despite broad weakness in the US dollar (for reasons we explained in our US dollar daily update), crude oil prices remain flat this morning. Customs data from China showed slowing crude oil imports in December. Imports fell from 37m tonnes in November to 33.7m tonnes in December. The data, in addition to profit taking, is keeping crude oil prices in check. Thanks to surging US production, China is now the world's largest crude oil importer. Looking at technical indicators and speculator sentiment, crude oil prices remain at bullish extremes. Our short-term and medium-term trending indicators continue to suggest a bullish trend.
WTI is currently trading above $63.40. Brent crude is currently above $69.10.
Looking at US crude oil stocks, the most recent EIA figures (January 10) showed falling crude oil stocks and rising gasoline inventories. Crude oil inventories were lower than estimates (-4.9m vs. -3.8m expected). Gasoline stocks were up (+4.1m vs. +2.6m expected) while distillate stocks (+4.2m vs. +1.4m 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.