Global oil benchmarks headed for their fourth weekly loss on Friday, Nov. 17, but recovered some losses on the day after plunging 5 percent to a four-month low on growing concerns about rising supply and cooling demand.
Brent futures rose $1.34, or about 1.7 percent, to $78.76 a barrel. U.S. West Texas Intermediate crude (WTI) was at $74.1, up $1.2, also about 1.7 percent. Both benchmarks have lost about a sixth of their value over the past four weeks, and are on track for their fourth straight week of losses, according to Reuters news agency.
At home, on the Multi Commodity Exchange (MCX), oil futures ahead of November 17 expiration last traded 3.75 percent higher at ₹6,252 per bbl, having swung between ₹6,070 and ₹6,261 per bbl during the session so far, against a previous close of ₹6,026 per barrel.
What weighs on oil?
-Oil’s decline this week was mainly driven by a steep rise in US crude inventories and production continuing at record levels, while signs of a demand meltdown in China also sparked concerns.
Read also: Saudi Arabia likely to extend additional oil supply cuts beyond December 2023: Report
-With Brent below $80 per barrel, many analysts now expect the Organization of the Petroleum Exporting Countries and its allies (OPEC+), mainly Saudi Arabia and Russia, to extend their voluntary cuts until 2024.
-Another factor contributing to negative sentiment was the number of Americans filing new claims for unemployment benefits increasing, and a slight contraction in industrial production figures.
-“Oil prices are down slightly this year despite demand exceeding our optimistic expectations,” Goldman Sachs analysts said in a note. “Non-core OPEC supply was much stronger than expected, partially offset by OPEC cuts.”
-The world’s top exporter Saudi Arabia is expected to extend its additional voluntary supply cuts to at least the first quarter, if not the first half of 2024, Amrita Sen, co-founder of Energy Aspects consultancy, said on Wednesday.
-For 2023, the US, which accounts for two-thirds of non-OPEC growth, is forecast to deliver annual gains of 1.4 million barrels per day (bpd) – boosting output to a fresh annual high, the International Energy Agency (IEA) said in its latest report. .
-But the drop in oil prices on Thursday had some analysts questioning whether the sell-off was overblown, especially given rising tensions in the Middle East that could disrupt oil supplies and the United States vowing to enforce sanctions against Hamas-backer Iran.
Where are the prices going?
Crude oil futures fell as much as 5 percent on easing concerns about supply pressure amid rising inventories and fears of a global economic slowdown. In the past month, WTI crude oil witnessed a decline exceeding 14 percent, according to analysts.
”A positive adjustment in global oil demand forecasts from OPEC+ and the IEA may provide some support to prices at these reduced levels. Anticipating continued volatility, crude oil finds support in the $72.30-71.50 range, with resistance at $73.90-74.50. As for INR, oil has support at ₹5,940-5,850 and resistance at ₹6,135-6,190,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
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Updated: 17 Nov 2023, 22:22 IST