Crude Oil Price Analysis for November 24, 2017

 

Crude oil prices continued to move higher on Thursday, as most traders who focus on WTI are on the sidelines celebrating the U.S. Thanksgiving. The main issue is the duration of the clean-up effort from the Keystone oil spill may span weeks, and South Dakota’s environmental regulator is unsure of how long it will take to restart the key artery, which links Canadian oil sands to refineries in the United States.

Technicals

Prices continue to break out hitting a high of 58.23 which is a fresh 28-month high. Target resistance near the May 2015 highs at 62.58.  Support is seen near the 10-day moving average at 56.56. Momentum is positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line( 9-day moving average of the MACD line) The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices. The relative strength index has flattened after accelerating higher as the RSI (relative strength index) which is a momentum oscillator that measures accelerating and decelerating momentum, is printing a reading just below the overbought trigger level of 70.

Rigs Counts Increased

Baker Hughes released its weekly oil rig count two days early due to Thursday’s holiday, revealing a 9 rig increase to 747. This is the second increase over the past three weeks.

Imports a Slowing but Domestic Production is Strong

Despite strong demand from refiners, U.S. crude oil imports averaged about 7.9 million barrels per day last week, down by 25,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 7.7 million barrels per day, 5.3% less than the same four-week period last year. Some of the decline in production was offset by a rise in U.S. production which is at a multi-year high at 9.658 million barrels per day

Inventories Dropped

The EIA added that U.S. commercial crude oil inventories decreased by 1.9 million barrels from the previous week, which was in line with expectations. Gasoline inventories remained unchanged last week, but expectations were for a 1-million barrel build. Distillate fuel inventories increased by 0.3 million barrels last week but are in the lower half of the average range for this time of year. Total commercial petroleum inventories remained unchanged last week.

Demand is Solid

Total demand remains strong and over the last month averaged 20.0 million barrels per day, up by 0.1% from the same period last year. Over the last month, gasoline demand averaged over 9.4 million barrels per day, up by 2.6% from the same period last year. Distillate fuel demand averaged over 4.0 million barrels per day over the last month, up by 0.8% from the same period last year.

The EIA reported that U.S. crude oil refinery inputs averaged over 16.8 million barrels per day during the week ending November 17, 2017, 199,000 barrels per day more than the previous week’s average. Refineries operated at 91.3% of their operable capacity last week, which is higher than utilization on a year over year basis. Gasoline production increased last week, averaging over 10.4 million barrels per day. Distillate fuel production increased last week, averaging over 5.3 million barrels per day.

 

Canadian Retail Sales Grew in September

Canada retail sales grew only 0.1% in September after a revised 0.1% drop in August. The ex-auto retails sales aggregate improved 0.3% following a 0.4% drop. The gain in total sales and the ex-autos sales aggregate fell well short of expectations. Sales volumes fell 0.6% in September. This is a disappointing report.