West Texas Intermediate (WTI) crude oil prices are facing continued selling pressure, marking the third consecutive day of decline on Friday. During the Asian session, it trades close to the lower end of the weekly range, hovering around the $67.80 region.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) made a significant decision on Thursday by postponing planned supply increases by three months until April and extending the full unwinding of cuts by a year until the end of 2026. This move signals the cartel’s concerns regarding a potential supply glut and a slowdown in global demand, with particular attention on China, the world’s leading oil importer. Such concerns have emerged as a major factor weighing down the price of crude oil.
On the other hand, the ongoing and worsening Russia-Ukraine conflict, along with rising tensions in the Middle East, have kept the geopolitical risk premium alive. Additionally, there are signs of US economic resilience, and there are hopes that the expansionary policies of US President-elect Donald Trump will boost fuel demand, which could potentially act as a positive influence on crude oil prices. However, traders are being cautious and refraining from making aggressive bets on the direction of prices, choosing instead to await the release of the crucial US Nonfarm Payrolls (NFP) report.
The highly anticipated US jobs data will play a vital role in shaping the interest rate outlook in the US. This, in turn, will have an impact on the demand for the US Dollar (USD) and could provide significant momentum to the crude oil commodity. In the current situation, the lack of significant buying interest, combined with the fundamental factors described above, gives an edge to bearish traders. Consequently, any attempt at a recovery in crude oil prices might be viewed as a chance to sell, and there is a risk that such a recovery could quickly lose steam.
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