Prices Tank As Evidence Builds Suggesting Plentiful Supply

Oil prices more than unwound the gains of the last few days and have fallen to their lowest not just for December but since late June. The EIA revised up its 2023 estimate for US output while Bloomberg data showed Russian exports at their highest since early July. This added to market fears of a widening surplus with demand also looking lacklustre. The USD index is 0.3% lower with attention now on today’s FOMC decision and forecasts.

• WTI fell below $70 and is now down 3.6% to $68.76/bbl, off the intraday low of $68.22 and down 9.5% on the month. It traded below support at $68.80 opening up $67.28, June 23 low.
• Brent has moved below $75 and is currently down 3.5% to $73.38/bbl to be 9.2% lower in December. It fell to a low of $72.86, below support at $73.50 which has opened up $67.28.
• The EIA revised up 2023 US supply by 30kbd but revised down expected global output for 2024 by 1.36mbd from last month. The structure of futures contracts continues to signal plentiful supply. OPEC’s monthly report is today and the IEA’s on Thursday.
• Bloomberg reported that US crude inventories fell 2.35mn barrels in the latest week, according to people familiar with the API data. Product stocks rose though with gasoline up 5.8mn and distillate 276k. The official EIA data is out later today.
• Also on the supply front, Chevron has increased its output in Venezuela by 100kbd since the US eased sanctions in October.
• Shipping in the Red Sea remains precarious with a biofuel tanker hit by a missile fired from Houthi-controlled Yemen on Monday.