US crude oil output remained near record highs last week, adding to bearishness in the market
Oil prices have steadied on Thursday after a solid four-day slide that pushed the prices to six-month lows. Brent crude briefly dipped to the $74 figure during the previous session to finish more than 4% lower for the day. Today, oil futures have settled around $75, struggling to attract more robust demand so far.
The market was driven lower by demand concerns amid further signs of economic slowdowns in the US and China. As for the latter, fresh data showed that crude oil imports in November fell 9% from a year earlier. Also, earlier in the week, Moody’s downgraded its outlook for China’s government credit rating to negative from stable.
Adding to the selling pressure, the official report out of the United States showed that crude oil output remained near record highs while fuel inventories increased last week. In particular, gasoline stocks rose by 5.4 million barrels, far exceeding expectations for a 1 million-barrel rise. On the positive side, US. crude inventories fell by 4.6 million barrels during the week.
Besides, traders have been skeptical that OPEC+ will deliver on supply cuts of 2.2 million bpd in the first quarter next year. As a reminder, last week, several alliance members announced the voluntary cuts last week. Earlier, the group failed to reach an agreement on production targets.
In the immediate term, Brent crude needs to regain the $75 figure in order to stage a more decisive recovery, with the next bullish target arriving at $76.50, followed by the $77 region. On the flip side, a renewed selling pressure may push the futures to fresh multi-month lows below the $74 key support that remains in the market focus at this stage.