Crude oil prices are trading flat this morning. Brent remains under $70 while WTI is under $65. Looking at exchange data from last week, speculator net positioning in crude oil remains at record highs. There are now more than 700,000 contracts holding long crude oil futures & options positions. While one-sided markets typically foreshadow reversals, crude oil prices continue to strengthen. Beyond the underlying fundamentals powering the commodity, the US dollar remains in a bear market. Looking at our US dollar daily update, the currency is currently hovering near three-year lows. Crude oil and the dollar tend to trade in opposite directions (i.e. they are inversely correlated). Our short-term and medium-term trending indicators continue to suggest a bullish trend.
WTI is currently trading above $64.40. Brent crude is currently above $69.80.
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.