December WTI crude futures recovered a good portion of its early loss as attacks on Saudi energy infrastructure brought buyers back. Higher Saudi output and a large build in U.S. inventories gave sellers more to work with, and the contract remains down for the week.
December WTI crude futures opened the week at $90.83, broke to $83.88, then rallied back to $88.20. At that price, WTI is down $2.63 for the week, or 2.90%.
Peace hopes trigger an early break
Traders took war premium out of crude after President Trump played down the possibility of new U.S. strikes on Iran. The market reached a two-month low on Tuesday.
However, the United States and Iran had not announced a peace agreement, and attacks on vessels and energy infrastructure had not stopped. Traders were selling the possibility of less disruption, not reacting to a settlement that had restored normal shipping.
Houthi attacks revive the supply threat
On Thursday, Yemen's Iran-aligned Houthis claimed attacks on a pumping station on Saudi Arabia's East-West pipeline, an oil facility in Yanbu and a Saudi Aramco building in Riyadh. There was no immediate Saudi confirmation of the Riyadh claim.
WTI and Brent rallied even as the market digested evidence of higher output and rising U.S. inventories. Trump also said Washington did not need a deal with Iran, which gave the market another reason to question how quickly the conflict might end.
Saudi output and U.S. stocks give sellers ammunition
According to OPEC data, Saudi Arabia reported production of 10.563 million barrels per day in October, more than 2 million barrels per day above September. OPEC+ production rose about 2.04 million barrels per day to 41.23 million.
U.S. commercial crude inventories rose 4.7 million barrels to 414.4 million in the week ended November 6, according to the EIA. Traders had expected a 1.1 million-barrel draw.
Levels traders are watching
The author's technical read puts the first support zone at $85.99 to $81.50. A trade through $83.88 would signal a resumption of the downtrend.
On the upside, the next potential target is the retracement zone at $94.44 to $96.93. The direction for the week ending November 20 is likely to hinge on $90.34.
Source: Oilprice.com
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