Crude oil continues to trend upward and is hitting its highest levels since 2014. This is a product of several international events including the renewed sanctions on Iran and the recent bombing of Syria. OPEC has also done a much better job of restricting production over the past year and increased shale output in the U.S. has been offset by strong economic demand.
The big question now is whether oil can keep going. While somewhat extended in the short term the momentum is strong and there is no reason to call a top in the group. The dips are being bought and there is quite a bit of bottom fishing in many of the low priced names that have been languishing for many years. A good example is W&T Offshore (WTI) which has gone parabolic and doubled over the past couple months. With a tailing PE of just 12 it is not an expensive stock.
Oil inventories were just announced and are having limited impact so far. Oil refinery input was down and with refineries operating at about 90% capacity that is pushing up gas prices. Crude oil imports are also down as are overall crude oil inventories. Inventories are in the lower half of average for this time of the year.
Despite what is generally bullish news for oil, these inventory numbers may produce a slight sell the news reaction but oil buyers will be lining up to buy pullbacks.
The news flow, the technical conditions, and the inventory numbers are supportive of further upside in oil prices. Don't be in a rush to look for a reversal in the strong uptrend.