Crude oil prices are currently flat - both Brent and WTI are currently trading sideways. Yesterday, the commodity was fairly volatile during US trading hours. After initially falling sharply, crude oil prices moved higher later in the day. Following weaker-than-expected core inflation data, the US dollar weakened, pushing up crude oil in relative terms. Note that both WTI and Brent continue to look overbought in the short-term.
Turning to recent developments, crude oil traders are now trying to find supply to replace Iranian exports. According to a Reuters story, Saudi Arabia has promised to fill part of the gap, but will not act entirely alone according to sources familiar with OPEC discussions. So far, the cartel has not communicated any increase in future supply in response to Iranian sanctions. As a result, the tightening crude oil market is helping prices strengthen further.
The White House has also been pushing Saudi Arabia to provide more crude oil supply in order to cap any further gains in the commodity. In recent history, President Trump has tweeted his displeasure with OPEC's moves to artificially limit supply. Our short-term and medium-term outlook on crude remains bullish.
WTI is currently trading above $71.40. Brent crude is currently above $77.40.
Looking at US crude oil stocks, the most recent EIA figures (May 9) showed falling crude oil stocks and falling gasoline inventories. Crude oil inventories (-2.2m vs. -1.0m expected) were lower than expectations. Gasoline stocks were down (-2.2m vs. -0.9m expected) while distillate stocks (-3.8m vs. -1.5m expected) were also down. Looking at reactions in markets, crude oil prices were higher following the EIA report.
As crude oil makes gains, we are now bullish on the commodity. Note that both Brent and WTI are both looking overbought. 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.