Weekly Oil Report: Sudden Shed of Crude Following A Bearish Pulse

Crude oil met its lowest since February. On Friday, Brent closed at $79.47 and WTI settled around $75.35. On Monday, Brent broke through the support line with a long-body candle and fell below $ 80. The market resisted the bears on Friday but it hasn’t been enough to get back on rising track. Watch crude oil technical analysis:

OPEC’s decision to extend both voluntary and group-wide production cuts until 2025 had a reversed effect on the market. Total production cuts are 3.66 million barrels per day, while 2.2 million bpd of the plan is in the voluntary scheme. According to Abdulaziz bin Salman, the cartel is waiting for a better trajectory in economic growth. Therefore, the plan looks to be very dependent on the fundamentals of the market. The Joint Ministerial Monitoring Committee (JMMC) has been authorized to hold more monitoring meetings in case of necessity.

Despite economic fears, geopolitical tensions are growing. After Ukraine got permission to use NATO-supplied weapons, Putin explicitly warned that Russia could arm the West’s enemies with long-range missiles in case of using those weapons.

“If someone thinks it is possible to supply such weapons to a war zone to attack our territory and create problems for us, why don’t we have the right to supply weapons of the same class to regions of the world where there will be strikes on sensitive facilities of those countries?” Putin said on Wednesday.

Israel also launched its largest hostage rescue operation on Saturday. The rescue ended with liberating 4 hostages safely. Gaza war is still continuing despite some talks about ending disputes.

The bearish signals of the OPEC decision and regional tensions were slightly moderated after hopes rose about US interest rate cut in September. After the European Central Bank cut the interest rate, the macro effect of it increased hopes for the same action from the Federal Reserve.  

The US is also continuing SPR recovery. The US energy sector finds the 75 WTI a good opportunity to replace the Strategic Petroleum Reserve. There is a chance to see a change of policy in US energy sector if Republicans win the presidency.

The bitumen market was interrupted by the sudden drop of oil. India which decreased rates by 4.5 dollars on June 1, seems to continue the same trend. Europe also had a decrease. Bahrain, Iran and East Asia stayed unchanged despite increasing costs.

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Latest Bitumen Price – 10 June 2024

This article was prepared by Mahnaz Golmohammadian, the export manager of Infinity Galaxy (www.infinitygalaxy.org).