WTI crude declines on increased output

As profit-taking increases and the US Dollar strengthens as a result of rising US Treasury bond yields, WTI crude declines 2.37% to $88.54 per barrel. The demand for oil may be at danger due to worries about the economy’s slowdown, which are emphasized by lower manufacturing data from China and Europe.

Oil prices are under pressure due to rising production from OPEC members as well as prospective supply increases from Saudi Arabia and Turkey. Despite recent news of an increase in oil production and profit-taking, WTI crude oil prices dropped after reaching a daily high of $91.84 per barrel. As a result, WTI is down 2.37%, trading at $88.54 per barrel.

WTI crude also experiences a downturn on the US dollar’s momentum, increased oil output, as well as concerns over global economic deceleration impacting demand. The rise of the dollar is seen as the main driver, while traders booked profits, as noted by Reuters.

It is worth noting that US Treasury bond yields, particularly the 10-year benchmark note hitting 4.70%, sponsored a leg-up to the buck, as shown by the US Dollar Index (DXY).

The DXY, which measures the US Dollar performance against six currencies, trades at around 106.94, posting gains of 0.72%, a headwind for US dollar-denominated commodities.

Oil traders must be aware of an ongoing economic slowdown. The latest China’s Caixin Manufacturing PMI, which decelerated, spurred a revision in the global economic outlook. Fitch Ratings said that despite the resilience in US consumer demand, reviewed its forecast downwards, for 2024, due to China’s deepening property slump.

That data and weaker-than-expected factory activity data in Europe weighed on WTI’s prices, as an economic deceleration could dent demand on oil.

According to a recent survey published by Reuters, the Organisation of Petroleum Exporting Countries (OPEC) reported that oil output increased for the second consecutive month in September. Nigeria and Iran saw the largest increases as OPEC nations produced 27.73 million barrels per day, up from 120,000 in August.
Oil supply is growing
In the meantime, Turkey announced the country would restart operations this week on Iraq’s pipeline, while Saudi Arabia could begin to ease its additional supply cut of 1 million barrels per day.

The US crude oil benchmark continues to be upward biased despite its decline, but if WTI drops below the most recent cycle low of $88.24 reached on September 26, that might pave the way for even more losses.

The 50-day moving average (DMA) at $84.66 would become the next support level if the latter were to be breached. In contrast, WTI needs to surpass the $94.99 YTD high in order to resume its advance and give buyers optimism of challenging $100 per barrel.