Crude oil Daily Updates

05 April 2018

Crude oil prices are currently flat - both WTI and Brent are trading sideways. Yesterday, crude oil prices initially weakened after China retaliated against US tariffs. Later in the day, the commodity began strengthening following comments from Larry Kudlow, a White House official. Kudlow suggested that the US and China were not pursuing a trade war, and were instead focused on negotiations. The commodity was also helped by rising values in other asset classes such as equities. 

Turning to data, the commodity strengthened following the latest EIA inventory figures. While the consensus was calling for a small build in inventories, crude stocks fell by more than 4.5m barrels. Gasoline stocks were also down, suggesting strong end-user demand from consumers. Following the sell-off earlier in the week, we are downgrading our short-term outlook on crude to neutral. Our medium-term outlook remains bullish.  

WTI is currently trading above $63.50. Brent crude is currently above $68.20.

Looking at US crude oil stocks, the most recent EIA figures (April 4) showed falling crude oil stocks and falling refined product inventories. Crude oil inventories were significantly lower than estimates (-4.6m vs. +0.4m expected). Gasoline stocks were down (-1.1m vs. -1.5m expected) while distillate stocks (+0.5m vs. -1.0m expected) were up. Looking at reactions in markets, crude oil prices strengthened following the EIA report.

Updated 
Short term outlook
Neutral

As crude oil runs out of steam, we are now neutral on the commodity. Note that both WTI and Brent are trading within normal conditions. This is based on technical indicators on the daily chart. 

Medium term 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