Oil falls 5% on week despite rumours on extension of Saudi supply cuts into 2024

• WTI Oil trades will likely close the week with significant losses. 
• The US Dollar weakens as markets price in that the Fed is done hiking. 
• Oil could show some brief blips on rumours from OPEC, but a further decline cannot be ruled out. 

Oil prices are sinking lower, which is a thorn in the eye for OPEC+. Saudi Arabia suggested that it could extend its supply cuts deep into 2024, though markets ignored this possibility and still sent Crude prices 5% down for the week. Looking at the reshuffle in supply and demand, it looks that the US has firmly jacked up its Oil production, contributing to a supply surplus for the current lower demand. 

Meanwhile, the US Dollar (USD) declined as well, in some sort or form of correlation. Traders are applauding the idea that Fed is done hiking, though fears are mounting that first a recession is ahead before bringing out the champagne on any Goldilocks scenario. In this context, the US Dollar might lose more value against most major currency pairs. 

Crude Oil (WTI) trades at $73.24 per barrel and Brent Oil trades at $78.09 per barrel at the time of writing. 

Oil news and market movers: markets surprised by US production

• Goldman Sachs analysts Daan Struyven and Callum Bruce pointed out that the United States has ramped up its Oil production. 
• Both numbers this week from the American Petroleum Institute (API) and the Energy Information Administration (EIA) indicated a build in crude stockpile in the US. 
• The presumption of an upcoming recession in the US will likely kick in,  weighing on the outlook for Oil demand in the near-term. With the supply surplus triggered by the US, more downside is in the cards for Oil prices.
• Markets will close off Friday with the Baker Hughes US Oil Rig Count data at 18:00 GMT. Previous number was at 494. 

Oil Technical Analysis: US quietly defies OPEC+

Oil prices are gearing up for more volatility ahead as a few new elements are being brought to the table this week. The recent decline in Crude prices can be attributed to the recent buildup in US Crude stockpiles. With this sudden increase in supply in the Oil market, a surplus is being built that takes the wind out of the supply cuts from Saudi Arabia and Russia, failing to sustain Brent futures over the $80 level. 

On the upside, $80.00 is the resistance to watch out for. Should crude be able to jump higher again, look for $84.00 (purple line) as the next level to see some selling pressure or profit taking. Should Oil prices be able to consolidate above there, the topside for this fall near $93.00 could come back into play.

On the downside, traders are seeing a soft floor forming near $74.00. This level is acting as the last line of defence before entering $70.00 and lower. Once in that area, markets might factor in the risk of a surprise intervention from OPEC+ to jack Oil prices back up again. 

US WTI Crude Oil: Daily Chart