West Texas Intermediate Crude Futures for January 2024 deliveries settled at its lowest value in five months, driven by easing demand and increasing global supplies. CLF24 settled at $69.38 per barrel, down $2.94 from previous close.
OPEC+ met last week and agreed to cut crude production by one million barrels per day through Jun 2024. Crude prices still sold off on this news as information about how the cuts would be distributed among the members was ambiguous and each member would announce their cuts individually. This made traders speculate that the cuts themselves may be voluntary.
Angola seemed to reject OPECs cuts as the OPEC governor Estevao Pedro said, "Angola will produce above the quota determined by OPEC."
Saudi Arabia has again stated it would maintain its voluntary cuts of one million barrels per day through 2024.
Ultimately, OPECs meeting was an underwhelming event for the market and traders may be losing faith the group will come to a group consensus on crude production quotas.
Although global production has been decreasing, inventories have been unexpectedly growing. Demand was less than expected for the first part of the holiday season. John Kilduff, a partner with Again Capital LLC said, "Even though it was not the peak gasoline season, demand during the long Thanksgiving holiday weekend was lackluster."
Right now, the markets are being driven more on the demand side information versus supply side. "Today's meltdown in the barrel is generally a function of demand destruction," Mizuho's Robert Yawger says in a note. "There is not enough demand in the market to sop up the limited amount of product coming out the other end of the refinery, which will ultimately result in a lot of crude oil being sent to storage."
The weekly EIA inventories report showed a drop in crude inventories and a rise in gasoline and distillates. Crude fell 4.6 million barrels. Gasoline rose 5.4 million barrels. Distillates rose 1.3 million barrels.
The conflict in Gaza had worried traders in October as it was believed that it would cause fighting to spill further out into the region and impact global oil supplies. That has started to happen, but the price of oil hasn't been impacted as drastically as it was first thought to be. US Central Command said on Sunday there had been four attacks on commercial ships in the Red Sea. Houthi rebels claimed responsibility for the attacks and stated they were legitimate targets as they had ties to Israel.
CLF24 settled at $69.38 per barrel, down $2.94 from previous close.
Oil is currently trading below the 50- and 200-day simple moving averages. The 50-day is at $81.34, and the 200-day is at $77.97.
The 14-day RSI is at 31.15%. As it approaches the oversold threshold of 30%, there may be short-term support.
The Directional Movement Index is indicating a negative direction. The ADX (white) is high indicating a strong trend. The positive directional index (+DI, green) is low and moving lower indicating a no change in current trend. The negative directional index (-DI, red) is high giving indication to the current trend on the chart. With the ADX being high along with the -DI, a move with the trend would be greater and more likely.
WTI Crude Futures January 2024 (CLF24)