Crude Oil flirts with weekly loss as OPEC+ decision fails to provide support

• Oil prices are on the back foot on Friday for a third consecutive day, flirting with a possible break lower. 
• OPEC+ decision to delay output normalization by three months failed to convince markets.
• The US Dollar Index dips to a near one-week low ahead of the US Nonfarm Payrolls release. 

Crude Oil dips below $68.00 on Friday as selling pressure persists once  OPEC+ has officially confirmed it will only delay its output normalization schedule by three months. That was the consensus view of markets, and investors took it as far too little in order to solve the current supply glut that is flooding the Oil market. 

The US Dollar Index (DXY) – which measures the performance of the US Dollar (USD) against a basket of currencies – is trading steady ahead of the US Jobs Report this Friday. Expectations of job growth have tempered a little bit after earlier this week several economic data points linked to employment were not sending a solid signal to markets. The Federal Reserve (Fed) will be present as well in today’s economic calendar with four Fed speakers scheduled throughout the day. 

At the time of writing, Crude Oil (WTI) trades at $67.77 and Brent Crude at $71.56.

Oil news and market movers: OPEC+ assumes too much

• The recent OPEC+ decision to delay a revival of supply to April will pare global Oil output next year, tightening balances somewhat, but a glut is still widely expected, according to banks and industry consultants, Bloomberg reports. 
• Oil flows from Russia via the Druzhba pipeline into the Czech Republic have restarted, according to Orlen SA, a refinery operator, Bloomberg reports. 
• OPEC+ pointed in its assessment to President-elect Donald Trump, who is expected to slap more sanctions on Venezuela and Iran over their Oil exports, which should resolve a portion of the oversupply. 
• The weekly Baker Hughes US Oil Rig Count is due at 18:00 GMT. The expectation is for a small uptick to 478 from 477 in last week’s count. 

Oil Technical Analysis: This will not resolve itself

Crude Oil price looks set for more downturn with OPEC+ unable to firmly address the issue of oversupply coming from non-OPEC+ countries. President-elect Donald Trump clearly is a key element in the OPEC+ assessment as he has vowed to drill more Oil than ever and promised to issue more Oil embargoes against Venezuela and Iran. OPEC+ seems to be forgetting that one will outweigh the other, and that the current sluggish economic global growth isn’t likely to absorb the persistent oversupply. 

The 55-day Simple Moving Average (SMA) at $70.11 triggered a firm rejection on Wednesday which is still playing out. Should tensions in the Middle East flare up, $71.46 with the 100-day SMA at $71.54 will act as thick resistance. In case Oil traders can plough through that level, $75.27 is up next as a pivotal level. 

On the other side, traders see $67.12 – a level that held the price in May and June 2023 – as the last man standing. In case that 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