Crude oil prices have fallen in the last 24 hours. Looking at WTI, prices fell from $61.35 at the start of the day yesterday down to $60.70 today. While American Petroleum Institute figures showed a lower-than-expected build in crude stocks (+1.16m vs. +2.6M expected), this was not enough to stop prices from falling. In political news, President Trump fired Secretary of State Rex Tillerson yesterday. Tillerson has frequently disagreed with Trump on how to deal with Iran, with the president favoring a more hawkish approach. Mike Pompeo, the next Secretary of State, is firmly opposed to the Obama-era Iran deal. If Trump walks away from the Iran nuclear deal on May 12 (the date of the next US sanctions waiver), crude oil prices are likely to rise as global supply falls.
Looking at crude oil prices today, both WTI and Brent are currently trading sideways. Data from China showed falling domestic production between January and February (down 1.9% to 3.77 million bpd), while crude throughput rose 7.3 percent. In other Chinese data, both fixed-asset investment and industrial output beat expectations. As China's industrial economy continues to grow while domestic crude production falls, demand for crude oil should remain supported. Our short-term outlook is neutral, while our medium-term outlook on crude remains bullish.
WTI is currently trading above $60.70. Brent crude is currently above $64.60.
Looking at US crude oil stocks, the most recent EIA figures (March 7) showed rising crude oil stocks and falling gasoline inventories. Crude oil inventories were lower than estimates (+2.4m vs. +3.0m expected). Gasoline stocks were down (-0.8m vs. -1.7m expected) while distillate stocks (-0.6m 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.