Crude oil Daily Updates

09 May 2018

Crude oil prices are currently strengthening - both Brent and WTI are moving up. Yesterday, the commodity sold off sharply ahead of Trump's decision on the Iran nuclear agreement. The culprit was a CNN story that claimed that Trump was likely to remain in the deal according to anonymous sources. The story was later refuted by other media outlets. While crude oil only moved up slightly yesterday, the commodity is making bigger gains today. 

Turning to recent developments, figures from the American Petroleum Institute showed that US crude oil inventories unexpectedly fell more than forecasts. Upcoming official data from the US Energy Information Administration later today will confirm the API's figures. As US end-user demand appears to be strong while 1m barrels/day are likely to be removed from future supply (thanks to US sanctions on Iran), crude oil continues to make gains.

Looking more deeply at Trump's announcement yesterday, the president instated the "highest level" of sanctions against Iran. Beyond direct sanctions on the country, the US is also looking to punish any businesses that transact with Iran. Iran became a significant crude oil exporter in 2016 following the multilateral nuclear deal and is currently the third largest OPEC exporter behind Saudi Arabia and Iraq. The removal of supply will help the crude oil market tighten significantly in the second half of this year. Yesterday's move up in crude oil was accompanied by massive trading volumes - a sign that bulls are buying with high conviction. This is a promising sign for crude oil, and signals continued gains. Our short-term and medium-term outlook on crude remains bullish.  

WTI is currently trading above $70.90. Brent crude is currently above $76.80.

Looking at US crude oil stocks, the most recent EIA figures (May 2) showed rising crude oil stocks and rising gasoline inventories. Crude oil inventories (+6.2m vs. +1.2m expected) were higher than expectations. Gasoline stocks were up (+1.2m vs. -0.7m expected) while distillate stocks (-3.9m vs. -1.5m expected) were down. Looking at reactions in markets, crude oil prices weakened immediately following the EIA report.

Updated 
Short term outlook
Bullish

As crude oil makes gains, we are now bullish on the commodity. Note that both Brent and WTI 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