Oil prices claw back some losses ahead of US NFP
2024-02-02
Summary:
OPEC+ kept oil output unchanged, boosting Friday trade and offsetting losses from unconfirmed Israel-Hamas ceasefire reports.
Oil prices rose in early trade on Friday following a decision by OPEC+ to keep its oil output policy unchanged, paring some losses from the previous trading session triggered by unsubstantiated ceasefire reports between Israel and Hamas.
OPEC+ delegates said that the group members plan to decide in early March whether to extend output cuts into Q2. OPEC’s production in January registered the biggest monthly drop since July, a Reuters survey found.
Both contracts settled more than 2% lower on Thursday. Negotiations were in the early stages and a breakthrough isn’t expected in the coming days, according to Bloomberg.
Production continued to increase and set a new monthly record of 13.3 million bpd in November 2023, according to the EIA. Output growth did not slow much as might be expected given the sharp deceleration in drilling.
The EIA showed US crude inventories rose by 1.2 million barrels last week, compared with analysts’ expectations for a decline of 217 thousand barrels. Crude runs fell to their lowest level since Jan 2023.
Adding to oil weaknesses, China’s manufacturing activity contracted in January for the fourth consecutive month, reflecting sluggish momentum in the world’s second-largest economy at the start of the year.
Brent crude dipped below the 50 EMA around $80. There is little to cheer at present unless we see a weaker-than-expected NFP repot later. On the downside, the $74 level will act as immediate support.
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