Crude oil prices are slightly lower today after weakening yesterday. The dollar has been strengthening following FOMC minutes that suggest a brighter outlook for US economic growth in 2018. From multi-year lows last week, the dollar has strengthened for the last four trading sessions in a row, but is taking a breather today. In general, crude oil has been weak thanks to a rising dollar and concerns regarding supply and demand. As we wrote in yesterday's daily update, the recent lower-high in crude oil prices suggests weaker sentiment. Turning to economic data, API figures suggest that crude stocks continue to fall, while gasoline stocks are rising. The numbers will be confirmed by upcoming EIA figures, which tends to have a far greater influence on prices relative to the API figures. Our short-term outlook is neutral, while our medium-term outlook on crude remains bullish.
WTI is currently trading above $61.0. Brent crude is currently above $64.80.
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.