Crude oil prices are currently flat - both Brent and WTI are trading sideways today. Yesterday, crude oil prices were up (despite a rising US dollar) in the first half of the trading day. After data from the American Petroleum Institute showed a bigger-than-expected rise in crude stocks, the commodity reversed course. While consensus expectations indicated a 2m barrel drop in inventories, actual inventories instead grew by +4.9m barrels. One reason for the significant jump may be pipeline bottlenecks in Texas and Canada. As API data and official EIA figures often diverge significantly, most traders are likely to be more focused on official numbers set to be released later today. Note that Brent continues to look overbought on a short-term time frame.
Turning to the latest developments, spot crude oil prices are at their steepest discounts in many years relative to futures prices as physical traders struggle to find buyers. Another significant concern is rising crude oil production. S&P Global Ratings recently claimed that projected crude oil supply from major producers (such as ExxonMobil and Royal Dutch Shell) is likely to increase in the near future. On the other hand, the market has been tightening thanks to strong end-user demand and falling supply from key producers including Iran and Venezuela. Our short-term and medium-term outlook on crude remains bullish.
WTI is currently trading above $71.0. Brent crude is currently above $78.10.
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 is looking overbought while WTI is trading within a normal range. 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.