Crude Oil News Today: Bearish Trend Emerges Amid Supply, OPEC+ Uncertainties

Extended Sell-off

Oil prices dipped for the second consecutive day, impacted by a significant increase in U.S. crude stockpiles and anticipations of a steady output policy from OPEC+.

At 09:21 GMT, Light Crude Oil Futures are trading $80.71, down $0.91 or -1.11%.

U.S. Crude Inventory Surge

Recent American Petroleum Institute (API) data revealed a substantial rise in U.S. crude inventories, climbing by 9.3 million barrels for the week ending March 22. This surge, alongside a minor increase in distillate stocks, contrasts with a decrease in gasoline reserves, signaling mixed market signals.

OPEC+ Output Policy

OPEC+, comprising the Organization of the Petroleum Exporting Countries and allies like Russia, appears set to maintain its current output policy. This stance is expected to continue until the group’s next major meeting in June. The consortium’s upcoming online meeting on April 3 will primarily focus on reviewing the market and compliance with existing output reductions.

Compliance Concerns

Despite OPEC+’s commitment to output cuts, compliance issues have surfaced. Notably, OPEC exceeded its February targets by 190,000 barrels per day, with Iraq acknowledged as one of the overproducers. This overproduction raises questions about the group’s capacity to adhere to agreed quotas.

Market Forecast

Given the recent inventory build in the U.S. and the steady output stance of OPEC+, the market leans towards a bearish outlook in the short term. The combination of increased supply in the world’s largest oil consumer and potential compliance issues within OPEC+ could exert downward pressure on oil prices. This bearish sentiment is further supported by the market’s reaction to the API’s inventory data and the ongoing uncertainty about OPEC+’s ability to enforce production discipline among its members.

Traders and market watchers should closely monitor the official EIA data release and any developments from the OPEC+ meeting for further cues on market direction.

Technical Analysis

Light crude oil futures are lower for a second session on Wednesday, hovering just above a short-term bottom at $80.30. A trade through this level will change the short-term trend to down. It could also be the trigger point for an acceleration to the downside with the next target the price cluster formed by the 50-day and 200-day moving averages at $77.14.

On the upside, resistance is the March 19 main top at $83.12.