Oil rallies on US purchase after a 7-week drop
2023-12-11
Summary:
Monday's oil price rise, fueled by US strategic reserve replenishment, faces oversupply worries due to record-high US output.
Oil prices inched higher on Monday, extending gains from last Friday as the US was set to replenish strategic reserves. However, record US output has intensified oversupply concerns.
Both contracts fell for seven weeks consecutively, the longest losing streak since 2018. The OPEC+’s voluntary cuts did not impress traders who doubt if supply will drop meaningfully.
To takes advantage of lower prices, the US Department of Energy said it wants to buy up to 3 million barrels of Crude Oil for the Strategic Petroleum Reserve for delivery in March 2024.
Chinese officials pledged they would spur domestic demand and consolidate and enhance the economic recovery in 2024. The world’s second largest economy is the key to energy demand growth.
India's fuel consumption in November fell after hitting a 4-month peak in the previous month, as travel in the world's third biggest oil consumer reduced after the festive season.
The US accounts for 80 per cent of the expansion in global oil supply this year, according to the IEA. US oil supermajors are boosting investment after austerity that followed the 2020 oil price crash.
The 50 EMA supports the suggested bearish wave. Brent crude may consolidate above 70 before until sees a rally above the level to resume uptrend.
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