Crude oil prices are only slightly lower this morning. Brent crude remains below $70 while WTI remains below $65. In recent history, a large number of commodity market commentators have flagged the risk a reversal in crude oil prices. Between large long crude oil positions in futures markets and the commodity looking technically overbought, there are many reasons for a short-term pull back. So far, crude oil prices have ignored all warnings and remain strong. Thanks to strong demand growth driven by the global economic upswing, sentiment towards crude oil remains fairly bullish. Later today, we'll see API figures showing US inventory data. Consensus estimates are optimistic, and analysts are calling for crude oil stocks to fall by -3.75m barrels. Our short-term and medium-term trending indicators continue to suggest a bullish trend.
WTI is currently trading above $63.70. 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 both trading within a normal range. 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.