Crude Oil dips on Trump bearishness while Gulf output stalls

• Crude Oil retraces for the second straight day, losing over  1% on Thursday. 
• Storm Rafael disrupts short-term US Oil output while Trump is set to boost shale production substantially. 
• The US Dollar Index fades under profit-taking as markets now focus on the Fed interest rate-cutting cycle. 

Crude Oil dips for a second day in a row on Thursday as commodity traders assess the impact of the Trump trade on Oil prices in the long term. US President-elect Donald Trump has vowed to boost shale Oil production in the US, which would add more barrels of Oil to the markets. Meanwhile, the tropical storm Rafael is set to take out roughly 1.55 million barrels per day in production as of Friday. 

The US Dollar Index (DXY), which tracks the performance of the Greenback against six other currencies, is fading under profit-taking from the steep rally that materialized after President-elect Donald Trump won the US presidential election over current Vice President Kamala Harris. Expect the focus now to dial down on Trump’s presidency until he takes office in January 2025, with the focus back on US economic numbers and the Federal Reserve (Fed), which is expected to cut its monetary policy rate by 25 basis points this Thursday. 

At the time of writing, Crude Oil (WTI) trades at $70.73 and Brent Crude at $74.23

Oil news and market movers: Oil outlook gets distorted again

• Tropical storm Rafael is hitting the shores of Cuba, making its way to the US Gulf region, Reuters reports. 
• Oil imports into China sank again last month, highlighting the sluggish consumption in the largest consuming country while traders weigh the implications of Donald Trump capturing the White House and potential supply rises from OPEC+ in 2025, Bloomberg reports. 
• On Wednesday, the Energy Information Administration (EIA) reported a surprise build of 2.149 million barrels in the week ending on November 1, bigger than the expected 1.8 million. The previous week’s number was a drawdown of 0.515 million barrels.

Oil Technical Analysis: ‘Leave the Oil to Me’

Crude Oil prices could be set for a bear cycle as Donald Trump is set to become the next US President in January 2025. Trump has already committed in the runup to the presidential election that regulation and permitting will become less strict. At the same time, funds allocated to green energy will be diverted towards shale Oil and fossil fuel projects. That means structural additional supply is set to be released in 2025, on top of OPEC+’s foreseen supply normalization. 

On the upside, the hefty technical level at $74.20, with the 100-day Simple Moving Average (SMA) and a few pivotal lines, is the next big hurdle ahead. The 200-day SMA at $76.80 is still quite far off, although it could get tested in case tensions in the Middle East arise. 

The 55-day SMA at $70.86, has lost control of the situation and no longer supports prices while being chopped up intraday. Traders need to look much lower at $67.12, a level that supported the price in May and June 2023. In case that level breaks, the 2024 year-to-date low emerges at $64.75, followed by $64.38, the low from 2023.

US WTI Crude Oil: Daily Chart