Crude oil futures weekly recap, December 22 – December 26

West Texas Intermediate and Brent crude both fell on Friday, capping a fifth straight weekly decline, as a bearish EIA inventory report exacerbated global supply glut concerns. A strong dollar continued to weigh on the market but clashes in Libya provided some support.

US crude for delivery in February slid 1.99% on Friday to settle the week 4.2% lower at $54.73 per barrel. Prices shifted in a weekly range of $58.53-$54.51.

Meanwhile on the ICE, Brent for settlement in the same month fell by 1.31% on Friday to $59.45, registering a 3.1% weekly drop. Brent settled at a premium of $4.72 to its US counterpart.

Brent and WTI extended their annual declines to more than 40% as OPECs determination to retain market share, record high US crude output and a strong dollar offset an upbeat economic outlook for the US, the worlds top consumer, and clashes in Libya, holder of Africas biggest crude reserves.

The Energy Information Administration reported on Wednesday that US crude oil inventories surged by 7.267 million barrels to 387.2 million in the week ended December 19th, the highest since June. Analysts had projected a withdrawal of 2.280 million barrels. Supplies at the Cushing, Oklahoma hub jumped to 28.8 million barrels from 27.8 a week earlier, reaching the highest since March.

US crude output was at 9.127 million barrels per day from 9.137 million the previous week, which was the highest for recorded weekly data spanning to January 1983. However, imports surged to 8.292 million bpd, the most since September 2013, from 7.104 million a week earlier.

Total motor gasoline inventories jumped by 4.083 million barrels to 226.1 million, the highest for this time of the year in weekly data spanning back to 1990, underperforming projections for a 0.6-million-barrel gain. Distillate fuel stockpiles, which include diesel and heating oil, rose by 2.303 million barrels to 123.8 million, the highest in nine weeks, defying analysts’ projections for a decline of 0.9 million barrels.

The exceedingly bearish inventory report offset previous positive sentiment drawn by US economic growth and consumer sentiment numbers. The Commerce Department reported that the worlds biggest economy expanded by an annualized 5.0% in the third quarter, blowing past expectations for 4.3% growth.

A separate report showed that December consumer sentiment surged to a pre-recession high, with the corresponding Thomson Reuters/University of Michigan index jumping to 93.6 from 88.8 in November. Personal income rose by 0.4% in November on a monthly basis, compared to 0.3% in October, while personal spending increased by 0.6%.

The upbeat data shot the dollar up, with a gauge measuring its strength against a basket of major peers jumping to the highest since April 2006. A stronger greenback makes dollar-denominated commodities pricier for holders of foreign currencies and curbs their appeal as an alternative investment.

OPEC comments

Comments by high-ranking OPEC officials from the last couple of weeks reinforced the groups determination to cope with the current prices in order to retain market share. Saad Al-Hadithi, a spokesman for the Iraqi prime minister’s office, said that Iraq approved a budget of 123 trillion dinars ($103 billion) for 2015, compared to previous plans of 141 trillion dinars. The spending plan was based on oil prices of $60 per barrel and reflected the second-biggest OPEC producer’s adjustment to the market’s current state and the country’s willingness to defend its market share.

Iraqi Oil Minister Adel Abdul Mahdi said earlier in the week that his country plans to raise production to 4 million barrels per day next year and that the group’s November 27 decision to maintain output was part of an effort to retain market share. Prices have fallen some 20% since the Vienna meeting.

Saudi Arabian Oil Minister Ali Al-Naimi told the Middle East Economic Survey on Monday that the Kingdom doesn’t plan to scale back production regardless of the prices reached. “Whether it goes down to $20, $40, $50, $60, it is irrelevant,” he was cited.

Last Sunday, Al-Naimi said that the global supply glut that recently drove oil prices to the lowest in 5-1/2 years was created by the lack of cooperation from non-OPEC producers. The group will probably refrain from cutting output, even if non-member producers offer to pump less, Al-Naimi said, and expressed confidence that oil will rebound as reviving global economic growth will spur demand.

Some support was drawn by continuing clashes in Libya which kept output at a fraction ot total capacity. The state-run National Oil Corp. said on Friday that several tanks were on fire at the countrys biggest export terminal Es Sidar following attacks by Islamist militias. However, the fire was expected to be contained within the day, Ali al-Hasy, a spokesman for the Petroleum Facilities Guard which protects the countrys eastern facilities, said.

Exports from Libyas biggest and third-biggest terminals Es Sider and Ras Lanuf were halted earlier in the month after the self-proclaimed, Islamist-backed government of Omar al-Hassi which took over Tripoli several months ago ordered the seizure of ports controlled by the internationally-recognized government of Abdullah al-Thinni.

Pivot points

According to Binary Tribune’s daily analysis for Monday, West Texas Intermediate February futures’ central pivot point is at $55.28. In case the contract breaches the first resistance level at $56.04, it may rise to $57.36. Should the second key resistance be broken, the US benchmark may attempt to advance $58.12.

If the contract manages to breach the first key support at $53.96, it might come to test $53.20. With this second support broken, movement to the downside could continue to $51.88.

Meanwhile, February Brent’s central pivot point is projected at $59.88. The contract will see its first resistance level at $60.54. If breached, it may rise and test $61.64. In case the second key resistance is broken, the European crude benchmark may attempt to advance $62.30.

If Brent manages to penetrate the S1 level at $58.78, it could continue down to test $58.12. With the second support broken, downside movement may extend to $57.02 per barrel.