Recent weeks have seen a sharp decline in the price of petroleum due to evidence of growing global supply, including estimates from ship-tracking companies that US oil shipments are almost at a record 6 million barrels per day. Global benchmark Brent fell 3.8%, below $75 per barrel, while US benchmark West Texas Intermediate fell 4.1%, below $70. The reduction in open interest in Brent and the shorting of oil by trend-following algorithms hastened the slide.
“The momentum selling is being further fueled by the fact that more and more support levels are caving in,” stated Fawad Razaqzada, a market analyst with City Index and Forex.com. Before we even talk about the possibility of an upward move, we must first witness a verified reversal signal.
The decline in oil prices was unabated, even after a US official data on Wednesday revealed that the nation’s crude stocks had dropped by 4.63 million barrels. The Energy Information Administration report, which showed a decline in US oil exports last week, is also partially being disregarded by traders since the figure’s so-called adjustment factor—which is similar to an error margin—was the largest shift on record.
Saudi Arabia has lowered its official selling prices to Asia by the largest amount since February, reflecting the weakening of the market. In an effort to calm the markets, the Organisation of Petroleum Exporting Countries and its partners announced larger output cutbacks on Thursday. However, the decline persisted since traders were not certain the cartel’s members would really implement the reductions.
Alexander Novak, the deputy prime minister of Russia, stated on Tuesday that OPEC+ may take more action if the accord reached last week is insufficient to stabilise the market. Vladimir Putin, the president of Russia, landed in the United Arab Emirates on Wednesday, the first stop of an uncommon overseas visit during which he is scheduled to discuss oil with authorities in the area.