Oil nosedives losing over 3% in US trading hours

WTI Oil is trading at 69.85 and is even expected to drop lower as US supply hits the export market. Oil looks set to sink even further as OPEC+ countries are reluctant to expand current production cuts. Brent Oil trades at $74.56 per barrel at the time of writing.

The US Dollar retreats after ADP numbers miss estimates. Oil prices are looking bearish as markets are pricing in the barrels that the US is releasing to the market. Recent findings show that the US is nearing 6 million barrels per day for export, according to recent ship-tracking data. The surplus is overshadowing the recent mild supply cut OPEC+ has committed to uphold and thus still creates an imbalance with more supply than demand at hand.

Meanwhile, the dollar is snapping its winning streak. The DXY US Dollar Index was near 104.00 and could pop higher during the week. Although US yields are declining, they are declining less rapidly than other peers, which favors the US Dollar against most other currencies. The Euro, the Chinese Yuan and Central European currencies are the biggest losers.

US Crude exports could reach about 5.7 million barrels a day, according to ship-tracking firms Kpler and Vortexa. The Energy Information Administration (EIA) data on Wednesday could confirm these findings.

Saudi Arabia has cut its pricing for Crude destined for the Asian market, according to a Bloomberg survey. Overnight, the weekly numbers from the American Petroleum Institute (API) revealed a build of 0.594 million barrels against the drawdown of 0.817 million barrels a week earlier.

On Wednesday, the Energy Information Administration (EIA) is due to release the weekly change in US Crude stockpile. Expectations are for a draw of 2.267 million against the buildup of 1.609 million a week ago.

Oil prices are sinking, breaking below November’s low. While OPEC+ faces a supply surplus, this surplus is getting bigger as the US becomes a big Oil producer. By dumping 6 million barrels per day on the global market, the excess surplus could well linger on for months before OPEC+ can finally tweak its policy in order to adjust production to liquidate the surplus. In this context, more downside is to come for oil prices until an OPEC+ decision or another catalyst takes out the surplus.