Crude oil ended a fourth straight losing week after entering a bear market, a downward movement in oil prices fueled by abundant supplies and rising inventories that offset attempts by OPEC+ leaders Saudi Arabia and Russia to keep the black market under control. gold.
U.S. WTI light crude oil for December delivery was trading at $73.62. dollars per barrel at 12:30 p.m. Bulgarian time on November 17 after ending trading a day earlier at $72.90 per barrel – down more than 20% from its peak in September. The global benchmark Brent for January delivery lost almost 5% on November 16 and was trading at $78.14 a barrel a day later at midday. Those falls followed news that United States oil stockpiles rose to their highest level since August last week. Inventories at the key storage facility in Cushing, Okla., also increased by more than 8 percent. Meanwhile, refiners in China, the largest importer of the fuel, cut daily processing rates last month due to tight margins. Data showing that unemployment benefits for Americans were the highest in almost two years also contributed to the cheapening of the black gold, a signal of a slowdown in economic growth that pushed down the prices of US stock indexes on November 16.
The downward movement was certainly accelerated by the algorithm-generated sell programs after the break of key technical support levels. Industry analysts commented that the average commodities trader likely liquidated most of its long positions by the end of the session on November 16.
The black gold’s four-week slide — its longest losing streak since May — comes despite collective and voluntary supply cuts by OPEC and its partners.
Losses have also been boosted by the disappearance of the risk premium from the war between Hamas and Israel, as fears of an expansion of the conflict and disruption of oil supplies have so far not materialized. There are also cross-directional signals that move prices up and down. The International Energy Agency announced on November 14 that the increase in production means the market will not be as tight as expected this quarter. A day earlier, OPEC presented stable upward trends in demand, and traders predicted that Riyadh would extend the period of its voluntary production cuts.
The oil futures curve also suggests softening prices. The spread between the two contracts with the closest dates to US WTI maturities is again in a contango configuration – where the near term quotes are lower than the longer term ones. The situation is similar with “Brent”, where contracts with a closer date to maturity are 12 cents per barrel lower against over 1 USD. dollar per barrel in their favor in October.
Meanwhile, US President Joe Biden’s energy security adviser, Amos Hochstein, will impose sanctions on the export of more than 1 million barrels per day from Iran because of the conflict in the Middle East. A surge in oil flows from Venezuela following the easing of US sanctions is likely to help offset lost supplies, with Vitol Group chartering a supertanker to transport black gold from the Latin American country.
The next meeting of the OPEC+ Production Policy Committee is scheduled for November 26. Goldman Sachs Group analysts expect the cartel to guarantee Brent prices in the range of USD 80-100. dollars per barrel in 2024, creating a modest deficit and consolidating its monopoly position. Simply because, in their estimation, the recent fuel sell-off is a result of higher-than-expected supply from non-OPEC countries.