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The Downtrend in the Oil Market Continues
12/7/2022 1:07 PMThe price of North American WTI Crude Oil is correcting within a downtrend around 74.40.
All the factors operating on the oil market since the beginning of autumn have been preserved. First of all, this concerns the recent decision of OPEC+ to leave the current parameters for reducing the oil production by 2.0M barrels per day against the background of the expected supply surplus in 2022, which was indirectly confirmed by yesterday's statement by the Russian Deputy Prime Minister Alexander Novak, who announced an increase in oil production in the Russian Federation for eleven months by 2.2%, contrary to the negative forecasts of the International Energy Agency (IEA), which assumed a significant reduction in production in Russia by 10.87M barrels per day to 10.86M barrels per day. In turn, as part of the last meeting of the cartel on December 4, its participants decided to maintain current production plans, despite the introduction by Western countries of the ceiling price level for Russian energy resources at 60.0 dollars per barrel and the ongoing uncertainty in the market: demand may drop significantly from quarantine restrictions in China, and the proposal – if official Moscow decides to take retaliatory measures and stops supplying its resources to countries that supported the introduction of a new pricing mechanism.
As for the local dynamics of American oil, yesterday, the Energy Information Administration of the US Department of Energy (EIA) raised the production forecast for 2022 to 11.87M barrels per day from 11.83M barrels per day, and expectations for 2023 increased to 12.34M barrels per day, which is 30.0K barrels higher than the previous value. According to the agency, global demand for hydrocarbons next year will be 100.82M barrels per day, which is lower than the previous forecast of 100.98M barrels per day. The average price of Brent Crude Oil for 2022 has been reduced to 101.48 dollars per barrel from 102.13 dollars per barrel.
On the daily chart, the trading instrument is moving around the year's low around 74.00, slightly correcting down.
Technical indicators confirm the high probability of further decline, strengthening the sell signal: fast EMAs on the Alligator indicator expand the range of fluctuations, and the AO oscillator histogram forms downward bars, falling in the sell zone.
Resistance levels: 76.30, 81.50. | Support levels: 73.00, 65.41.