Crude oil experienced a steep loss, closing at 6030, a decrease of 2.84%. Concerns over China’s economic expansion and international efforts to bring about a Middle East truce impacted the bearish trend. In March, OPEC+ will decide whether to prolong the voluntary oil production cutbacks of 2.2 million barrels per day (bpd) that were set for the first quarter. OPEC+ declared that it would maintain its current output strategy.
The International Monetary Fund’s prediction of a slowdown to 4.6% growth in 2024 and a further decrease to roughly 3.5% in 2028 highlighted the persistent concerns about China’s economic recovery. The U.S. Energy Information Administration reports that rail shipments of crude oil fell by 25,000 barrels per day to 241,000 barrels per day in November in the United States.
In addition, despite estimates of a 217,000-barrel decline, U.S. crude stockpiles increased by 1.2 million barrels to 420.7 million barrels in the week ending January 26 as refineries recovered from frigid weather. The crude oil market is technically characterized by fresh selling, as seen by the significant 54.73% increase in open interest that settled at 13618.
Given the sharp decline in price and the spike in open interest, the technical picture points to a pessimistic attitude. In order to successfully manage the volatile crude oil market in the upcoming weeks, traders should keep a close eye on economic indicators, OPEC+ decisions, and geopolitical developments.
