Oil prices stretch losses into a 6th session in a row

“Momentum traders and falling volumes worsened crude’s recent plunge while OPEC’s latest announcement of output cuts and Saudi’s additional threats that they will extend their solo cut beyond Q1 went totally unheard,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said in a note.

“Worse, as the bears saw that investors ignored the supply cuts and threats, they feel more confident to increase their bets against crude,” she wrote.

Meanwhile, worries over demand have continued to plague the market.

Crude imports by China saw a monthly fall of 10% in November to a four-month low of 10.37 million barrels a day, reported S&P Global Commodity Insights, citing Thursday data from the General Administration of Customs.

Still, while China’s total imports dropped on a monthly basis, exports grew for the first time in six months in November, “suggesting that manufacturing is recovering with the global economy recovering some,” said StoneX’s Kansas City energy team, led by Alex Hodes, said in a Thursday note.

Oil traders are also closely watching developments tied to the approval of a referendum in Venezuela last weekend to claim sovereignty over an oil-rich piece of land from Guyana.

Read: What the Venezuela-Guyana border dispute means for oil prices

So far, there has been no impact in the oil markets from that development, said Tom Kloza, global head of energy analysis at OPIS, a Dow Jones company. He told MarketWatch, however, that it will be interesting to see what happens in 2024 given that crude oil futures and price movements are “incredibly seasonal” — tending to trade in four cycles every year.

One of those cycles tends to lift oil prices by nearly 40% from an early winter low to an April peak, he said. “My hunch is that saber-rattling in Guyana will fit the narrative that develops when crude-oil prices stage what I see as an inevitable recovery,” said Kloza, and the market could see some “brisk increases” in prices.

Over in the U.S., data from the Energy Information Administration released Wednesday may not have been as bearish as they seemed, said Phil Flynn, senior market analyst at The Price Futures Group.

“There is no doubt that demand is down, [but] unless it stays that way, the global supply and demand balance is still way too tight,” he said in a daily report. If OPEC+ follows through with cuts, and if the weekly drop in U.S. oil production begins to trend, we still should face a supply versus demand deficit.”   

On Wednesday, crude slumped after the EIA said gasoline inventories rose 5.4 million barrels last week, while distillate stocks rose 1.3 million barrels.

Rising product inventories offset a larger-than-expected drop in U.S. crude inventories of 4.6 million barrels.

The EIA on Thursday, meanwhile, reported that domestic natural-gas supplies in storage declined by 117 billion cubic feet for the week ended Dec. 1. On average, analysts surveyed by S&P Global Commodity Insights forecast a weekly fall of 105 billion cubic feet.