Crude Oil Starts Heading Lower Toward $80 After Failing at MAs
Crude Oil was on a retreat since last year, but August and September saw some positive price action for crude Oil due to Saudi Arabia’s production cutbacks, which in turn drove up demand. However, there was a turnaround at the end of September, which sent prices down sharply. The price of WTI crude Oil shot up to just over $95, before crashing to lows of $80, reaching the bottom at $81.60.
However, by the middle of last week, the US dollar started retreating lower. Nonetheless, the decline in Oil prices persisted despite the US currency’s decline and another notable drawdown in EIA stocks last week, as the report issued last week revealed a drop of -2.2 million barrels against an expectation of -446 million.
One of the reasons for this were the rumors last week about a potential Saudi agreement including US approval for the sale of sophisticated weapons to Saudis and US assistance for a civilian nuclear program in Saudi Arabia. But, This week crude Oil opened with a $4 bullish gap, so it seems like this was a case of sell the rumour buy the fact.
The US EIA reduced its demand growth projections by 50,000 barrels per day this year and 40,000 barrels per day next year. It now projects 1.76 mbpd of growth in 2023 and an extra 1.32 mbpd increase in 2021. Regarding supplies, the EIA reduced its forecast for 2024 to +200k from +380k and increased its estimate for US crude output in 2023 to +1.01mbpd from +0.87mbpd. It is hardly surprising, considering the number of rigs, that the net production in 2024 is lower than anticipated.
US WTI Crude Oil Live Chart
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