As crude inventories have risen, alongside fears of a slowdown in the global economy, crude has been falling, dropping as much as 5% on Thursday.
West Texas Intermediate (CL=F) crude oil futures dropped by 4.9%, settling at $72.90 per barrel on Thursday. International benchmark Brent crude oil (BZ=F) dropped by 4.63%, closing at $77.42 per barrel.
WTI has fallen over 16% in the last month, while Brent crude is down over 14%.
Oil is presently running about 22% off the 2023 highs it hit in late September as traders increasingly worry about flagging demand as the global economy begins to show signs of slowing. This will be the fourth consecutive week of falling oil prices.
A Wednesday report revealed that the inventories at the key storage hub in Cushing, Oklahoma increased by 3.6 million barrels, beating estimates for a 1.2 million barrel build.
Andy Lipow, president at Lipow Oil Associates, said, “The oil production surveys for October have been showing increasing amounts of OPEC+ production and combined with higher inventories in the USA and worries over demand, prices have been falling.”
He added, “When the market broke through $78, the selling accelerated as programmed trading kicked in.”
Dennis Kissler, senior vice president at BOK Financial, agreed that the technical setup around the 200-day moving average of just over $78 per barrel began to break down, saying, “Technically, [December] crude futures continue to battle the 200-day moving average, which is a key technical support area; a weekly close below will likely prompt more selling.”
The top oil producers in the world disputed the downbeat sentiments of traders on Monday, with the latest monthly oil report from OPEC saying, “fundamentals remain strong despite exaggerated negative sentiments.”
On November 26th, OPEC, the group of major oil producers and exporters, will hold a meeting to set production quotas.
Current production cuts the group has agreed on are scheduled to remain in effect through 2024.
Currently Saudi Arabia has unilaterally cut its production by one million barrels per day through the end of 2023, and Russia has similar production cuts in place over the same period.
