Crude oil prices are higher today, following a global stock market rebound. Key Asian stock markets including Japan's Nikkei 225 and Hong Kong's Hang Seng Index are up sharply today. Beyond improving risk sentiment, crude oil is also being supported by rising political tensions in the Middle East. Israeli Prime Minister Benjamin Netanyahu said that Israel may act unilaterally against Iran, after border incidents in Syria. Last week, WTI found support around $58 and has since rebounded. While underlying fundamentals remain supportive for the commodity, US production continues to surge. Last week, the US oil rig count grew by 4 rigs, while EIA data also suggested that US production continues to rise. For now, rising shale oil supply has failed to curb enthusiasm for crude oil. Last week's Commitments of Traders report showed that net positioning in the commodity remains at bullish extremes. Our short-term outlook is neutral, while our medium-term outlook on crude remains bullish.
WTI is currently trading above $62.10. Brent crude is currently above $65.1.
Looking at US crude oil stocks, the most recent EIA figures (February 14) showed rising crude oil stocks and gasoline inventories. Crude oil inventories were lower than estimates (+1.8m vs. +3.0m expected). Gasoline stocks were up (+3.6m vs. +1.2 expected) while distillate stocks (-0.5m vs. -1.5m expected) were down. Looking at reactions in markets, crude oil prices were mixed following the EIA report.
As crude oil runs out of steam, we are downgrading the commodity to neutral. Note that both WTI and Brent are trading within normal conditions. 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 WTI and Brent are trading within normal conditions.