🛢️ WTI drops over 3%

Saudi Arabia cuts export prices to Asia to the 27-month low

Crude oil is down 3% today, significantly reversing the price rebound from the first week of 2024. The price rebounded in early January due to escalating tensions in the Middle East, primarily after Houthi attacks on merchant ships in the Red Sea. Additionally, production has been halted at Libya's largest oil field, limiting the available supply in the market. This, coupled with the implementation of voluntary production cuts by OPEC countries, has contributed to the price increase.

Nevertheless, over the weekend, Saudi Arabia announced a reduction in export prices for its Arab light crude oil to Asian countries, cutting the price to the lowest levels in 27 months. There is speculation that this move is aimed not only at non-OPEC countries but also at producers within the cartel itself, with the goal of preventing manipulation under the current agreement and securing a larger market share. Furthermore, Reuters indicates that OPEC's production increased in December, mainly due to higher output in Nigeria, Iraq, and Angola, offsetting further production cuts by Saudi Arabia. It is worth noting that Angola is leaving the OPEC cartel structure this year.

WTI crude oil is retreating after last week's rebound and is notably falling below $72 per barrel today. Moreover, the price has not reached the 50-day moving average, which has remained untouched since the end of October. The zone between the 25- and 50-day MAs is currently considered a supply zone. Additionally, the low from earlier this year may be treated as a potential right shoulder of the inverse head and shoulders formation. The neckline is currently around $74.75 per barrel.

OIL.WTI at D1 interval. Source: xStation5