WTI falls by 1% after briefly surging

Earlier on the trading day, oil rose on the back of news reports about ship attacks near Yemen. However, economic data continues to soften. OPEC production unexpectedly increased, further pressuring WTI bids.

News reports of ongoing attacks on cargo ships off the coast of Yemen sparked a brief rally in Crude Oil bids. Iranian-back Houthi rebels have declared their intent to continue attacking ships that travel through the key waterway connecting Europe and Asia.

Market fears of supply disruptions remain unrealized, deflating near-term price increases. Near-term action sees a fresh round of selling pressure after production figures from OPEC unexpectedly rose, adding 48K barrels per day to monthly production of 26.53 million barrels per day.

Furthermore, the S&P Global Manufacturing Purchasing Managers’ Index (PMI) for December fell to a four-month low of 47.9, indicating that US economic statistics once again fell short.

Market expectations were mostly for the number to remain stable at November’s reading of 48.2, which reduced risk appetite and caused Crude Oil to decline as investors sold off their commodities and stocks to begin the 2024 trading year and returned to the US dollar, their safe haven.