Crude Oil eases further as Pemex fully resumes operations in Gulf of Mexico

• Oil prices are heading lower for a second day in a row ahead of the API release. 
• Pemex reports that all of its Oil platforms and export terminals in the Gulf are back to operational after closing due to bad weather. 
• The US Dollar Index trades around 107.00, up against most major peers. 

Crude Oil declines further on Tuesday, slipping below $70.00, after news that Pemex – the Mexican state-owned Oil producer – has fully resumed operations in all its platforms in the Gulf region. The news comes with the end of the annual hurricane season and improving weather conditions, which means more supply is set to come online.  

The US Dollar Index (DXY) – which measures the performance of the US Dollar (USD) against a basket of currencies – is up against nearly every major currency this Tuesday. The move is still being fueled by the preliminary US Purchasing Managers Index (PMI) release for December, which showed that the economy expanded at the steepest pace in 33 months driven by the services sector. Meanwhile, traders brace for the Retail Sales release on Tuesday and the Federal Reserve rate decision on Wednesday. 

At the time of writing, Crude Oil (WTI) trades at $69.65 and Brent Crude at $73.05.

Oil news and market movers: More supply reported to come online

• Pemex’s Oil platforms and all crude-exporting terminals are operating normally after weather conditions improved in the Gulf of Mexico, according to a statement from the group, Bloomberg reports.
• The EU has imposed sanctions on Dutch national Niels Troost. Troost allegedly was involved in trading Russian Oil above the price cap set by Western countries in response to Moscow’s full-scale invasion of Ukraine, the FT reports.
• Around 21:30 GMT, the American Petroleum Institute (API) will release its weekly Crude Stock Pile numbers for the week of December 13. Last week, there was a build of 0.499 million barrels. 

Oil Technical Analysis: Caught between two lines

Crude Oil prices are softening on Tuesday, with possibly the peak of last week at $70.96 as the high for now. There isa rather steady bandwidth visible on the charts, with $67.00 as lower band and $71.50 as upper band, and this range looks set to extend into January 2025.

Looking up, $71.46 and the 100-day Simple Moving Average (SMA) at $71.03 are acting as firm resistance levels. On Friday, already some selling pressure emerged ahead of that same 100-day SMA. In case Oil traders can plough through that level, $75.27 is up next as a pivotal level, though watch out for quick profit taking with the year-end quickly nearing. 

On the downside, it is too early to see if the 55-day SMA will be reclaimed again at $70.12. That means that $67.12 – a level that held the price in May and June 2023 – is still the first solid support nearby.  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