Oil futures experienced a slight rebound on Thursday, following a five-day slide that caused the U.S. benchmark price to fall below $70 per barrel. This decline resulted in crude prices hitting their lowest point since late June.
- West Texas Intermediate crude for January delivery rose by 41 cents, or 0.6%, to $69.79 a barrel on the New York Mercantile Exchange.
- February Brent crude, the global benchmark, increased by 52 cents, or 0.7%, to $74.82 a barrel on ICE Futures Europe.
The recent drop in oil prices can be attributed to the OPEC+ meeting held on November 30. Traders were left disappointed by the meeting, as additional voluntary cuts for the first quarter of next year failed to meet expectations. The voluntary nature of these cuts raised concerns about compliance with the measures.
According to Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, momentum traders and falling volumes have exacerbated the plunge in oil prices. Additionally, OPEC's announcement of output cuts and Saudi Arabia's threats to extend their solo cut beyond Q1 went largely unnoticed by investors. This has emboldened bearish traders to further increase their bets against crude oil.
Concerns about demand in the market have continued to weigh on oil prices. Data from the General Administration of Customs shows that China's crude imports fell by 10% in November to a four-month low of 10.37 million barrels per day.
Furthermore, a report from the Energy Information Administration revealed that gasoline inventories rose by 5.4 million barrels last week, while distillate stocks increased by 1.3 million barrels. This surge in product inventories offset a larger-than-expected drop of 4.6 million barrels in U.S. crude inventories.
Despite these challenges, oil futures are showing signs of recovery as traders monitor market developments closely.