Crude Oil Drops to a New Year Low - What's Happening? / Commodities / Crude Oil
Here’s how to make sense of thedifferent figures reported by the Energy Information Administration (EIA).
Macroeconomics
From a macroeconomic point of view, the US dollar index (DXY or USDX) has maintained its downward trend within its recent regressionchannel, probably still eyeing the next quarterly S2 pivot just located at the$100 mark.
U.S. Dollar Currency Index (DXY), dailychart
As we will see in this article, a certainlack of appetite for petroleum products isfueling the general impression of anemic demand, stifled by hikes in keyinterest rates by central banks (the Federal Reserve, the European CentralBank, the Bank of England, etc.) around the world combined with the slowingeconomy.
Geopoliticaland Fundamental Analysis
The price of a barrel of West TexasIntermediate (WTI) closed Wednesday down 3% after falling a moment earlier toits lowest level of the year ($71.75 on the January futures contract). As the geopoliticalfears were placed in the background, even the EU’s price cap onRussian oil has not really impacted the market, as I mentioned lastweek, given that Russia has made investments into its own fleet ofoil tankers, so they have the option to deliver their Uralscrude oil by putting their own conditions or even simply findingother clients eventually.
Already resolutely on the downside forseveral days as concerns over supply risk are gradually evaporating, the blackgold market was encouraged to continue in this downward momentum by the EIA’sweekly report on US crude oil inventories.
U.S.Crude Oil Inventories
(Source: Investing.com)
Operators ignored the significantcontraction of 5.187 million barrels in commercial crude reserves to focus on stocks of refined products to get an overview of US petroleum demand.
U.S.Gasoline Inventories 
(Source: Investing.com)
The oil market is sinking due to asignificant increase in gasoline stocks, which rose by 5.320
million barrels, nearly doublingexpectations (2.7 million barrels).
U.S.EIA Weekly Distillates Stocks
Now, regarding the reserves of distilledproducts – such as diesel, mainly – they also increased significantly, by 6.159million barrels versus the 2.2 million barrels forecasted.
(Source: Investing.com)
In fact, this figure has to be comparedto the demand for refined products in the United States, which remained, lastweek, below its level of 2021 at the same time, whereas on average over thepast four weeks, the demand for gasoline dropped more than 7% lower than a yearago.
Finally, OPEC+’s decision last Sunday(Dec 4th) to maintain their production and not reduce it further, isanother bearish factor.
TechnicalCharts 
WTI Crude Oil (CLF23) Futures (Januarycontract, daily chart)
WTI Crude Oil (CLF23) Futures (Januarycontract, 4H chart)
RBOB Gasoline (RBF23) Futures (Januarycontract, daily chart)
Brent Crude Oil (BRNG23) Futures(February contract, daily chart) – Contract for Difference (CFD) UKOIL
That’sall for today, folks! Happy trading!
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Thank you.
Sebastien Bischeri
Oil & Gas Trading Strategist
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