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Crude Oil News Today: Prices Rebound but Face Weekly Loss Ahead of Jobs Report

By:
James Hyerczyk
Updated: Jun 7, 2024, 13:09 GMT+00:00

Key Points:

  • Oil prices rise on OPEC+ assurances but head for third weekly loss due to supply concerns.
  • Saudi Arabia and Russia emphasize ability to adjust output, affecting market sentiment.
  • ECB rate cut spurs oil demand expectations, with U.S. payroll data influencing future Fed actions.
Light Crude Oil Futures

In this article:

Oil Prices Rebound on OPEC+ Assurances but Head for Weekly Loss

Oil prices edged lower on Friday after giving up earlier gains. The market saw a slight uptick at the start of the session, bolstered by reassurances from OPEC+ leaders Saudi Arabia and Russia about their readiness to adjust output agreements. Despite this, the market is on track for its third consecutive weekly decline, reflecting broader concerns about supply and demand balance.

At 08:52 GMT, Light Crude Oil futures are trading $75.27, down $0.28 or -0.37%.

OPEC+ Supply Decisions Impact Market

Over the past few days, oil prices regained some ground as OPEC+ communicated confidence in their supply strategies. Saudi Arabia and Russia attempted to calm markets on Thursday by emphasizing their ability to quickly adapt to market conditions.

However, Sunday’s OPEC+ meeting suggested increased supply levels, a bearish signal for prices. The group extended most production cuts into 2025 but allowed for gradual unwinding of voluntary cuts by eight members. Increased supply can lead to lower prices due to higher availability in the market.

Market Reaction and Expert Insights

Saudi Energy Minister Prince Abdulaziz bin Salman stated that OPEC+ could pause or reverse output increases if market conditions weaken. Russian Deputy Prime Minister Alexander Novak attributed recent price drops to misinterpretations and speculative activities.

Analysts, including Jarand Rystad of Rystad Energy, predict OPEC+ will continue managing the market and may introduce further cuts if demand softens. Market reactions to such announcements can result in price volatility as traders adjust positions based on perceived supply security.

Central Bank Policies and Oil Demand

The European Central Bank’s recent interest rate cut has spurred expectations that the U.S. Federal Reserve might follow suit. Lower interest rates typically boost oil demand by stimulating economic activity. May’s U.S. non-farm payrolls data, due on Friday, could influence the Fed’s decisions. Economists predict a gain of 190,000 jobs, with wage growth maintaining pressure on inflation. Increased economic activity generally leads to higher oil consumption, supporting prices.

Economic Indicators and Forecasts

Private payrolls data and initial unemployment claims suggest a slowing job market. Citigroup forecasts the addition of just 140,000 jobs in May, potentially prompting the Fed to cut rates sooner. Goldman Sachs anticipates a 160,000 job gain, with wage growth aligning with inflation concerns. A weaker job market can reduce consumer spending and industrial activity, potentially lowering oil demand and prices.

China’s Crude Imports

China, the largest crude importer, reported importing 46.97 million metric tons of crude in May, underlining its significant role in global oil demand. High import levels from China can support global oil prices by indicating robust demand from one of the world’s largest consumers.

Market Forecast: Bearish Outlook

Given the anticipated rise in supply from OPEC+ and mixed signals from economic indicators, the short-term outlook for oil prices remains bearish. While reassurances from OPEC+ may offer temporary support, the broader trend suggests continued pressure on prices. Traders should brace for potential volatility as market conditions evolve.

Technical Analysis

Daily Light Crude Oil Futures

All three trend indicators are pointed lower despite the three-day short-covering rally. The move didn’t take out any major tops and was likely fueled by oversold conditions.

On the upside, pivot price resistance comes in at $76.41, followed by the 200-day moving average at $78.13. On the downside, a trade through $72.48 will signal a resumption of the downtrend with $69.64 a potential target.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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