05 Dec 2024

WTI continues to decline for the second consecutive day, although a significant drop appears to be out of reach. Concerns regarding potential supply disruptions due to geopolitical tensions may provide some support. Traders are now anticipating the OPEC+ meeting for potential direction ahead of the crucial US Non-Farm Payroll (NFP) report.

On Thursday, West Texas Intermediate (WTI) US Crude Oil prices are experiencing ongoing selling pressure for the second day, having retraced a substantial portion of their weekly gains. The commodity is trading below the mid-$68.00s, reflecting a decrease of 0.30% during the Asian session, although the downward movement is somewhat mitigated in light of the upcoming OPEC+ meeting.

Reports indicate that the cartel is likely to postpone plans to increase production until at least the second quarter of 2025, driven by concerns over declining oil demand, particularly from China, the leading global importer. Additionally, the escalating Russia-Ukraine conflict and rising tensions in the Middle East maintain a geopolitical risk premium, which could potentially support Crude Oil prices.

The official data published by the Energy Information Administration (EIA) on Wednesday indicated that US oil inventories decreased more than anticipated, with a reduction of 5.07 million barrels during the last week of November. Additionally, indicators of economic resilience in the United States, coupled with optimism regarding the potential for President-elect Donald Trump's expansionary policies to enhance fuel demand, are likely to mitigate losses in Crude Oil prices.

Traders may choose to exercise caution by avoiding aggressive directional bets and instead await the forthcoming US Nonfarm Payrolls (NFP) report. This important employment data is expected to significantly impact market expectations regarding the Federal Reserve's (Fed) approach to interest rate cuts. Consequently, this will affect the dynamics of the US Dollar (USD) and potentially provide new momentum for Crude Oil prices.