Crude oil prices are slightly lower this morning. Looking at Brent, the benchmark is trading below $70 while WTI is below $65. The commodity continues to look fairly overbought on both the daily and the weekly chart. As we wrote in yesterday's daily update, long crude oil positions on US futures & options exchanges are currently at record highs. In recent news, US crude oil supply is set to surpass a production record last achieved in the 1970s. Later today, many expect the US EIA to announce that US supply has surpassed 10 million barrels per day. The agency is predicting that US supply will rise to 11 million barrels per day later this year, putting US crude oil production in line with Russia (the world's top producer). So far, demand continues to run ahead of supply, keeping the bull market intact. 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 $69.90.
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.