Oil News: Weekly Losses Mount as Easing Supply Risks Push Oil Prices Lower

Crude Oil Futures Slip as Trading Volume Remains Thin

Light crude oil futures are trading lower in a quiet, holiday-shortened session. With major players sidelined, volume is well below average, leaving prices vulnerable to technical levels.

At 12:01 GMT, Light Crude Oil futures are trading $68.36, down $0.36 or -0.52%.

Futures are currently below key resistance at $69.11, with a bearish bias steering traders to potential support zones at $66.53 and $65.65. Even if prices manage to break above $69.11, significant resistance lies at the 50-day moving average of $70.13, complicating any sustained rally.

We advise caution, suggesting traders avoid chasing strength or weakness in the current thin conditions.

Weekly Losses Deepen as Supply Risks Ease

Crude oil is on track for a weekly decline exceeding 3%, weighed down by easing concerns about potential supply disruptions in the Middle East. The truce between Israel and Hezbollah has reduced geopolitical risk premiums, a key factor in oil’s recent downward trajectory. Despite accusations of ceasefire violations, no disruptions to oil production have been reported, and the risk of major supply interruptions has diminished.

Ample Supply in 2025 Looms Over Market Sentiment

The International Energy Agency (IEA) has forecast a surplus of over 1 million barrels per day (bpd) of global oil supply in 2025, equivalent to more than 1% of global production. This outlook has reinforced bearish sentiment, with analysts predicting average oil prices could dip below 2024 levels. Market participants are also eyeing the OPEC+ meeting, now rescheduled to December 5, where the group is expected to extend production cuts. While these cuts may provide temporary support, the longer-term oversupply outlook is expected to cap price gains.

U.S. Crude Inventories Drop More Than Expected

The Energy Information Administration (EIA) reported a drawdown of 1.844 million barrels in U.S. crude oil inventories, far surpassing forecasts of a 605,000-barrel decline. This unexpected reduction signals strong demand for crude, bolstering bullish sentiment. The drawdown marks a stark contrast to the previous week’s inventory increase of 545,000 barrels, underscoring a potential tightening of the U.S. market. Such data is crucial for traders, as declining inventories often indicate upward pressure on crude prices.

Geopolitical Factors and OPEC+ Decisions in Focus

Geopolitical developments remain critical to market direction. While the Israel-Hezbollah truce has eased immediate risks, traders remain wary of potential escalations. Meanwhile, the upcoming OPEC+ policy meeting will determine whether output cuts will continue into 2024, a factor likely to influence both short-term and long-term price dynamics.

Market Forecast

The crude oil market currently exhibits a bearish tone, with prices likely to test support levels around $66.53 to $65.65 in the near term. Easing supply risks and bearish forecasts for 2025 weigh heavily on sentiment, but robust U.S. demand, as reflected in inventory data, could limit further losses.

Key drivers in the coming weeks include geopolitical developments and the December OPEC+ meeting. For now, the outlook remains cautious, with downside risks dominating but potential support from strong U.S. demand trends.

More Information in our Economic Calendar.