Crude oil Daily Updates

02 April 2018

Crude oil prices are higher today - both WTI and Brent are registering gains. The US oil rig count, a proxy for US supply, unexpectedly fell last week by seven rigs to 797 in total. After bottoming in March 2016, the number of active US oil rigs has more than doubled thanks to accelerating crude oil prices. In early 2014, prior to crude oil's significant sell-off, the total number of active oil rigs peaked above 1,600. Recent growth in the number of active oil rigs has been much more limited, which has helped the bullish case for crude oil. 

In other news, fears regarding Iranian supply is also helping crude oil prices. As President Trump is unlikely to renew sanction waivers against Iran on May 12 (when they expire), crude oil prices are likely to strengthen ahead of the announcement. In 2017, Iran exported more than 2 million barrels per day. Global crude oil supply in 2017 was just under 98 million barrels per day. As a result, any disruption to Iranian crude oil is likely to have a significant impact on prices for the commodity. Our short-term outlook and medium-term outlook on crude oil is bullish. 

WTI is currently trading above $65.10. Brent crude is currently above $69.60.

Looking at US crude oil stocks, the most recent EIA figures (March 28) showed rising crude oil stocks and falling refined product inventories. Crude oil inventories were higher than estimates (+1.6m vs. +0.9m expected). Gasoline stocks were down (-3.5m vs. -2.3m expected) while distillate stocks (-2m vs. -1.5m expected) were also down. Looking at reactions in markets, crude oil prices strengthened following the EIA report.

Updated 
Outlook
Bullish

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. 

Updated