Crude oil dropped on last trading session of the year but ended with their biggest annual percentage gain since 2009 on the back of an agreement struck between OPEC and non-OPEC countries to cut crude production output. In a sign that producers are adhering to an agreed production cut, Oman notified some of its term customers that it will cut term allocations by 5 percent in March, but did not state if the reduction in supply would continue after that. The market also shrugged off an unexpected increase in U.S. crude inventories, which rose 614,000 barrels in the week to Dec. 23, U.S. Energy Information Administration (EIA) data showed. Still, the rise in crude stocks in the EIA data was significantly smaller than in Wednesday’s American Petroleum Institute (API) data that indicated a 4.2 million barrel build in U.S. crude oil stocks in the same period.
Traders are expected a balance to return to the market by the middle of 2017, however, as OPEC’s production cuts take full effect. However, there are factors beyond the control of OPEC that could impact the price of oil. Shale production is ramping up in the U.S., and lower-cost, synthetic oil blends could drive down the price that OPEC is seeking to boost.
A report by Ritterbusch & Associates said there is a “high probability” that U.S. shale production will break the OPEC production pact. Technically market is under long liquidation as market has witnessed drop in open interest by -11.69% to settled at 7500 while prices down -15 rupee, now Crudeoil is getting support at 3631 and below same could see a test of 3613 level, And resistance is now likely to be seen at 3674, a move above could see prices testing 3699.
CRUDEOIL TRADING IDEA TODAY :
* Crudeoil trading range for the day is 3613-3699 – 3712.
* Crude oil dropped on last trading session of the year but gained on yearly basis on the back of an agreement struck between OPEC and non-OPEC countries.
* The market also shrugged off an unexpected increase in U.S. crude inventories, which rose 614,000 barrels.
* Traders are expected a balance to return to the market by the middle of 2017, however, as OPEC’s production cuts take full effect.