West Texas Intermediate (WTI) crude oil prices are experiencing selling pressure for the second consecutive day on Thursday. This has led to a significant reversal of the weekly gains, with the commodity trading below the mid-$68.00s and registering a 0.30% decline during the Asian session. However, the downward movement appears to be somewhat cushioned as the market awaits the OPEC+ meeting scheduled for later in the day.
There are reports indicating that the OPEC+ cartel will likely further postpone its plans to boost production until at least the second quarter of 2025. This decision comes in the wake of concerns regarding the slowdown in oil demand, particularly from China, which is the world’s largest oil importer. Additionally, the ongoing Russia-Ukraine conflict and the escalating tensions in the Middle East are keeping the geopolitical risk premium alive. These geopolitical factors could potentially act as a supportive force for crude oil prices.
On Wednesday, the Energy Information Administration (EIA) released official data showing that US oil inventories shrank by more than expected, specifically by 5.07 million barrels in the final week of November. Moreover, there are signs of the US economy’s resilience, along with hopes that the expansionary policies of US President-elect Donald Trump will drive up fuel demand. These elements combined should help to limit the losses for crude oil prices.
Traders are being cautious and refraining from making large directional bets at present. Instead, they are choosing to wait for the release of the highly anticipated US Nonfarm Payrolls (NFP) report. The details of this employment report will be crucial in shaping market expectations regarding the Federal Reserve’s (Fed) path for interest rate cuts. In turn, this will impact the price dynamics of the US Dollar (USD) and could provide a new source of momentum for crude oil prices.
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