Crude oil prices are down today - both WTI and Brent crude are currently selling off. Last week, crude oil prices surged as markets feared a military confrontation between the US and Russia in Syria. Over the weekend, Trump tweeted "Mission Accomplished!" following the recent strikes. As a further escalation in the Syrian conflict seems unlikely, crude oil prices are heading lower.
Turning to data, US drilling activity was higher last week as firms added seven active oil rigs (bringing the total number of rigs to 815). This is the highest figure since March 2015. While the growth of US oil rigs is more measured relative to the previous surge between 2013 and 2014, overall US supply continues to grow at a fast pace. Based on the current trajectory, crude oil is likely to be oversupplied in the near future. For now, the commodity remains supported thanks to OPEC's supply cuts and healthy global demand. Our short-term and medium-term outlook on crude remains bullish.
WTI is currently trading above $66.50. Brent crude is currently above $71.50.
Looking at US crude oil stocks, the most recent EIA figures (April 11) showed rising crude oil stocks and rising gasoline inventories. Crude oil inventories were significantly higher than estimates (+3.3m vs. -0.2m expected). Gasoline stocks were up (+0.5m vs. -1.1m expected) while distillate stocks (-1.0m vs. 0m expected) were down. Looking at reactions in markets, crude oil prices continued to accelerate following the EIA report.
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.