- Petrol surges, plummets in frenzied energy markets.
- WTI falls to $74.50 amid increased market volatility.
- OPEC production cuts unlikely to alleviate oversupply as demand decreases.
West Texas Intermediate (WTI) Crude Oil is experiencing a turbulent session during Friday’s late-week trading, rallying back towards $77.00 per barrel before slipping back towards $74.50 as oil markets fluctuate. Oil took a sharp hit on Thursday as investors remain skeptical that the Organization of the Petroleum Exporting Countries (OPEC) will be able to effectively implement recently-announced production cuts.
OPEC recently announced an additional million barrels per day (bpd) reduction in Crude Oil pumping quotas, but markets are uncertain about the oil cartel’s ability to enforce a production cap that is increasingly unpopular with many of its smaller member states.
Lack of agreement over quantities, duration, and general terms has fossil fuel investors questioning OPEC’s ability to enforce compliance with the opt-in cuts, expected to run through the first quarter of 2024.
With OPEC’s weak million bpd production cut unlikely to offset declining global Crude Oil demand, oil supply overhangs are expected to worsen in the coming months.
According to the United States Energy Information Administration (EIA), US Crude Oil reserves rose further for the week ending November 24th, adding 1.6 million barrels to current Crude Oil stocks. While this was a significant decrease from the previous week’s 8.7 million barrel addition, it still surpassed the market’s optimistic projection of a 933K barrel drawdown.
WTI Technical Outlook
WTI Crude Oil is slipping back into the lower end on Friday after a cautious recovery is cut short. US Crude Oil faced a sharp rejection from the 200-day Simple Moving Average (SMA) near $78.00 today, and WTI is poised to end Friday’s trading session on a downward trend.
Oil has experienced a tumultuous, unpredictable, and choppy consolidation phase in recent days, trading erratically between $78.00 and $75.00 per barrel. A bearish extension from here will require significant momentum to break the downside barrier near $74.00, while an upward swing will need to close near the 50-day SMA around the $82.00 mark.
WTI Daily Chart
WTI Technical Levels
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