Crude oil prices are currently slightly higher - both WTI and Brent are making gains today. Last week, the commodity sold off as fears of a trade war escalated alongside weakening economic data. Sell-offs have been particularly acute when trade tensions have escalated. Last Monday, the commodity sold off after China retaliated against American tariffs. Last Friday, the commodity suffered another sell-off after Trump threatened to slap China with more tariffs targeting $100b worth of trade.
Today, the commodity is making gains after Trump expressed hope for a deal. As we wrote in our US dollar daily update, Trump expects China to remove trade barriers while making a deal on intellectual property. Looking at commodity news, OPEC's second largest producer (Iraq) said that May supplies will remain steady. In the US, producers added 11 rigs last week, bringing the total to 808. While US supply continues to accelerate, the pace of US supply growth has been fairly tame relative to the previous growth spurt between 2013 and 2014. Our short-term outlook on crude is currently neutral, while our medium-term outlook remains bullish.
WTI is currently trading above $62.20. Brent crude is currently above $67.30.
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.
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.
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.