Crude oil prices are currently slightly higher. While crude oil sold off at the outset of the week, the commodity has registered small gains over the last three trading sessions. Despite a big move up in the US dollar yesterday, crude oil managed to eke out small gains. As crude oil is primarily traded in US dollars, the commodity tends to weaken when the dollar strengthens.
Turning to the latest news, the International Energy Agency (IEA) said that global supply increased by 700,000 barrels per day from a year ago to 97.9 million barrels per day. This year, supply is expected to increase by 1.8 million bpd, led by non-OPEC producers such as US shale. The IEA's forecasts are slightly higher than OPEC's forecasts (1.66m bpd in 2018). Both agencies expect supply to overtake demand this year. This week's data showed that crude inventories are rising despite OPEC's efforts to limit new supply growth. Our short-term outlook is neutral, while our medium-term outlook on crude remains bullish.
WTI is currently trading above $61.10. Brent crude is currently above $65.10.
Looking at US crude oil stocks, the most recent EIA figures (March 4) showed rising crude oil stocks and falling gasoline inventories. Crude oil inventories were higher than estimates (+5.0m vs. +2.6m expected). Gasoline stocks were down (-6.2m vs. -1.6m expected) while distillate stocks (-4.4m vs. -1.3m 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.