- Oil prices are under pressure on Friday, marking a third consecutive day of losses and nearing a potential breakdown.
- The OPEC+ decision to delay output normalization for three months failed to provide the expected support to markets.
- The US Dollar Index falls to a near one-week low ahead of the upcoming US Nonfarm Payrolls report.
Crude Oil dropped below $68.00 on Friday as selling pressure continued following OPEC+’s decision to delay its output normalization by just three months. This move, in line with market expectations, was seen as insufficient to address the ongoing supply glut flooding the oil market.
The US Dollar Index (DXY), which tracks the performance of the USD against a basket of currencies, is holding steady ahead of the US Jobs Report. Expectations for job growth have moderated slightly after recent employment-related data failed to provide strong signals. Additionally, the Federal Reserve will be in focus, with four Fed speakers scheduled throughout the day.
As of writing, Crude Oil (WTI) is trading at $67.77, while Brent Crude stands at $71.56.
Oil News and Market Movers: OPEC+ Takes an Optimistic View
- OPEC+’s recent decision to delay supply normalization until April is expected to reduce global oil output next year, tightening market balances. However, banks and industry consultants still foresee a supply glut, according to Bloomberg.
- Oil flows from Russia through the Druzhba pipeline into the Czech Republic have resumed, as confirmed by Orlen SA, a refinery operator.
- OPEC+ also highlighted the potential impact of President-elect Donald Trump’s anticipated sanctions on Venezuela and Iran’s oil exports, which could help address some of the oversupply.
- The weekly Baker Hughes US Oil Rig Count will be released at 18:00 GMT, with expectations for a slight increase to 478 rigs from last week’s 477.
Oil Technical Analysis: Oversupply Issue Remains Unresolved
Crude Oil prices are poised for further downside, as OPEC+ has yet to effectively address the persistent oversupply from non-OPEC+ nations. President-elect Donald Trump’s commitment to increasing oil production and imposing further sanctions on Venezuela and Iran adds complexity to the OPEC+ strategy. OPEC+ seems to overlook the imbalance between these factors, while global economic growth remains sluggish and unlikely to absorb the ongoing oversupply.
The 55-day Simple Moving Average (SMA) at $70.11 triggered a strong rejection on Wednesday, and the effects are still being felt. If tensions in the Middle East escalate, resistance will be encountered at $71.46, with the 100-day SMA at $71.54 providing additional pressure. Should prices break through this level, the next major resistance is at $75.27.
On the downside, $67.12, a key support level from May and June 2023, is seen as the last significant defense. A break below this level could open the door to the 2024 year-to-date low at $64.75, followed by the 2023 low at $64.38.
