Oil Futures Dip as Mixed Signals Confound Traders; Consumption Forecasts Diverge

Oil Futures Dip as Mixed Signals Confound Traders; Consumption Forecasts Diverge

VoM News Desk | December 19, 2023 | 01:02 PM IST | Breaking News | Follow on Google News

Oil Futures Dip as Mixed Signals Confound Traders; Consumption Forecasts Diverge Image/Reuters

Oil Futures Dip as Mixed Signals Confound Traders; Consumption Forecasts Diverge

In a day of fluctuating markets, Brent crude and US crude futures experienced a slight decline after a tumultuous session on Friday, December 15.

The seesaw movement saw prices dropping more than $1 a barrel at one point, reflecting traders’ struggle to reconcile conflicting signals regarding oil demand in the upcoming year.

Brent futures settled down by 6 cents, constituting a 0.08% decrease to $76.55 per barrel, while US West Texas Intermediate (WTI) crude finished at $71.43, down by 15 cents or 0.21%.

On the Multi Commodity Exchange (MCX), crude oil futures scheduled for a December 18 expiry closed 1.06% lower at ₹5,953 per bbl, fluctuating between ₹5,839 and ₹6,004 per bbl during the session.

The International Energy Agency (IEA) projected a 1.1 million barrels per day (bpd) rise in global oil consumption for 2024, a 130,000-bpd increase from its previous forecast. However, this estimate remains significantly below the Organization of the Petroleum Exporting Countries’ (OPEC) demand forecast of 2.25 million bpd.

OPEC and its allies, including Russia (OPEC+), agreed on a collective 2.2 million barrels per day (bpd) output cut for the first quarter of the following year. Nonetheless, concerns persist about some members adhering to these commitments.

A positive indicator for oil markets was the reduced drilling rig count reported by energy technology firm Baker Hughes, which declined by 3 to 623 in the week ending December 15.

This drop in rig count from its post-pandemic peak indicates potential future output adjustments due to the decline in oil and gas prices.

The crude oil market saw a second consecutive session of gains on Thursday, supported by the IEA’s optimistic demand forecast for 2024.

This surge was further reinforced by the weakening dollar index, lower US 10-year bond yields, an upsurge in risk appetite, and the strength exhibited in global equity markets.

Analysts anticipate sustained volatility in crude oil prices, outlining support levels at $71.50–70.80, with resistance identified at $72.90–73.50.

Additionally, in terms of INR, expected support for crude oil is at ₹5,880–5,810, while resistance is anticipated at ₹6,120–6,190, as per Rahul Kalantri, VP Commodities at Mehta Equities Ltd.

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VoM News Desk

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