Crude Declines Further, Shipping Attacks May Impact Trading

Oil prices took another leg down on Friday after the unconvincing OPEC announcement on Thursday. The Baker Hughes oil rig count rose 5 and record US output has been one of the major factors loosening the market. There was also technical selling. Even the weaker dollar and lower US yields couldn’t support crude (USD index fell 0.3%).

• WTI fell 2.1% to $74.38/bbl to be down 1.5% on the week. Technical selling was triggered once it fell through $75 and it then declined to a low of $73.93. The bear trigger is at $72.37.
• Brent was 1.6% lower at $79.56 with technical selling activated at $80. It fell to an intraday low of $78.75. It ended the week down 1.1%. $76.71 is the bear trigger.
• Attacks by Houthi rebels on three commercial shipping vessels in the Red Sea on Sunday may cause some price volatility as the area is major shipping route for energy supplies.
• On Thursday OPEC+ announced another 900kbd of voluntary output cuts but there is significant uncertainty over compliance with Angola already saying it doesn’t accept its quota and Brazil, who joins next year and has contributed to the rise in global supply, has not been included in the production reduction.
• Also on the supply side, there seems to be doubts over whether the US will lift sanctions on Venezuela after the President failed to release American prisoners by the November 30 deadline.