Oil Stable After Its Longest Weekly Decline In Five Years

Oil steadied after experiencing its longest weekly losing streak in five years, a trend fueled by indications that supply is starting to outpace demand.

Since late September, the price of oil has declined more than 20% despite implementation of additional production cuts by OPEC+ and indications from Saudi Arabia and Russia of a potential extension of restrictions beyond March.

Robust U.S. jobs report exceeded expectations and the intention to replenish the Strategic Petroleum Reserve contributed to crude oil breaking a six-day downward trend on Friday.

As of 7:22 p.m., Brent traded 0.04% higher at $75.87 per barrel, while West Texas Intermediate was trading 0.03% higher at $71.25 per barrel.

"Oil prices elevated to $76.06 a barrel as U.S. efforts to replenish strategic reserves provided some support, although concerns of crude oversupply and softer fuel demand growth next year lingered," said Ritesh Bhanshali, vice president, Mecklai Financial Service Ltd.

"WTI Crude oil futures recovered from five-month low of $69.11 per barrel hit Friday but largely holds losses made this week as a massive 5.4 million barrels inventory build in gasoline and a 1.3 million barrels increase in distillates offset the crude draw of 4.6 million barrels," Kotak Securities said in a note.

"Also, China’s exports surprised with an uptick for the first time in seven months in November. However, sharp upside in metals is restricted as Moody’s downgrade for Chinese sovereign bonds to negative weakened the mainland nation’s economic outlook," the note added.

"The potential economic challenges in China pose a threat to crude oil demand. However, a correction in the dollar index, following gains in the Japanese yen, provided some support to oil prices at lower levels," Rahul Kalantri, VP Commodities, Mehta Equities said.

"Anticipating ongoing volatility, we expect crude oil prices to remain unpredictable in today's session. Crude oil finds support in the range of $69.35–68.80, with resistance levels at $71.10-71.70 for the current session. In INR, crude oil has support at Rs 5,740-5,660 and faces resistance at Rs 6,850-5,930," Kalantri said.

In the coming week, monthly report on supply and demand fundamentals may emerge with the release of monthly reports from the International Energy Agency and the Organization of Petroleum Exporting Countries. Additionally, investors will be closely watching the Federal Reserve's last interest rate decision of the year.