Investing.com – A pause till Christmas, then a return to crack the $40 support before New Year?
That could be oil bears’ agenda as U.S. West Texas Intermediate prices popped on Friday after a savage selling through most of the week that left the market down 10% for its largest weekly slide in a month.
U.K. Brent, the global benchmark for oil, fell another 1% after Thursday’s 5% rout and headed for an 11% loss on the week, looking like the bigger loser for now versus U.S. crude.
By 12:00 PM ET (17:00 GMT), was up 6 cents, or 0.1%, at $45.94 per barrel after plumbing a July 2017 low of $45.13 earlier on Friday.
was down 30 cents, or 0.6%, at $54.05 per barrel after making a Sept 2017 low of $52.81.
Few think the reprieve for WTI, which appears to have $40 support circled over its head as a target, could be anything other than a breather for short-sellers who’d likely return energized after Christmas to try and finish the task of tipping the market into the $30 levels before New Year.
“The end of 2018 could not be more different than the end of 2017,” Dominick Chirichella, director of risk and trading at the Energy Management Institute in New York, wrote on Friday in his final note for the year. “Most all asset classes (including oil) are either already in a bear market of very close to entering one.”
“The market has mostly concluded (for now) that the supply cuts from the latest OPEC accord are not likely to be deep enough to quell the surplus with global oil demand expected to slow,” Chirichella added.
The Saudi-led OPEC and its non-member allies led by Russia pledged two weeks ago to cut a total of 1.2 million barrels per day of supply for six months beginning January to try and restore a global oil market that has been in freefall since October.
But crude prices have continued tumbling since the announcement by the enlarged OPEC+ group. WTI and Brent have tacked on about 15% more in losses over the past two weeks, on track to finish the year about 40% lower.
In an attempt to try and improve the bullish narrative, sources within OPEC released to The Wall Street Journal on Thursday documents revealing Saudi plans to curb its oil output by more than it committed two weeks back. The cartel would also be more transparent about its production going forth, the Journal reported.
Reuters also reported on Friday a letter by OPEC Secretary General Mohammad Barkindo that member states of the cartel should reduce output to 3.02%, which is higher than the originally agreed figure of 2.5%.
Barkindo reportedly said member countries would make their quotas public, with Reuters reporting that the cartel expected to publish the full list of supply cuts by the end of next week.
None of these appear to have the stopped the bears in their tracks as worries about relentless U.S. production and potential weakening of demand ahead of a possible global recession are having a bigger impact.
Fears of a partial shutdown of the U.S. government from Republicans-Democrats budget impasse over President Donald Trump’s long-standing plans to build a border wall added to the list of negatives on Friday.