Optimism for global economic growth and OPEC/Russia supply cuts are helping crude oil prices. Both Brent and WTI rallied yesterday and are slightly higher this morning. The IMF upgraded its outlook for global growth yesterday, thanks in part to President Trump's tax cuts. Faster economic growth tends to drive demand for crude oil. The commodity also remains supported by falling inventories which have exceeded consensus estimates for quite a few weeks in a row. Looking at OPEC, recent comments from Saudi Arabia's energy minister are raising hopes for an extension of ongoing OPEC/Russia supply cuts. While speculator net positions on futures & options exchanges remain at a bullish extreme, crude oil continues to rally. Our short-term and medium-term trending indicators suggest a bullish trend.
WTI is currently trading above $63.90. Brent crude is currently above $69.40.
Looking at US crude oil stocks, the most recent EIA figures (January 18) showed falling crude oil stocks and rising gasoline inventories. Crude oil inventories were lower than estimates (-6.9m vs. -3.4m expected). Gasoline stocks were up (+3.6m vs. +4.0m expected) while distillate stocks (-3.9m vs. +0.0m expected) were down. Looking at reactions in markets, crude oil prices were mixed following the EIA report.
As crude oil continues to make gains, 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, 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.