Crude oil prices, looking at WTI and Brent, are currently flat. The commodity has been trading sideways for the last three trading sessions. Looking at the latest news, OPEC Secretary General Mohammad Barkindo is expected to meet with senior US shale executives later today. CERAWeek, the largest energy industry conference, is kicking off in Houston today. As OPEC looks for a way to end supply cuts in the future, the cartel is likely to pursue a deal in order to limit US production. Hopes for an agreement are low given US regulations that forbid voluntary supply limits. The US oil rig count rose to 800 according to data released last week, an all-time high. Rising US production remains the biggest risk for crude oil on the supply side. Turning to other news, global risk sentiment is falling today after recent Italian elections. The success of euroskeptic parties, including M5S is weighing on sentiment. While crude oil remains steady, global stock markets have been selling off. Our short-term outlook is neutral, while our medium-term outlook on crude remains bullish.
WTI is currently trading above $61.60. Brent crude is currently above $64.70.
Looking at US crude oil stocks, the most recent EIA figures (February 28) showed rising crude oil stocks and gasoline inventories. Crude oil inventories were higher than estimates (+3.0m vs. +2.8m expected). Gasoline stocks were up (+2.5m vs. -0.8m expected) while distillate stocks (-1.0m vs. -1.0m expected) were down. Looking at reactions in markets, crude oil prices fell 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.