US data showing a surprise build in crude oil inventories has failed to slow down the rally. Both Brent and WTI booked gains yesterday and are trading sideways this morning. Looking at the API figures, weekly crude stocks rose to +4.8m (vs. -1.9m expected). Gasoline stocks (+4.1m) were also higher than consensus estimates (+2.5m). Traders will look to confirm the API numbers with the official US EIA figures set to be released later today. In general, the crude oil rally remains supported thanks to optimism for global growth (which drives demand) and supply restrictions thanks to the OPEC/Russia supply cuts. While speculator net positions on futures and options exchanges remain at bullish extremes, the rally continues unabated. Our short-term and medium-term trending indicators suggest a bullish trend.
WTI is currently trading above $64.30. Brent crude is currently above $69.60.
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.