Oil prices fell 2% as weak US economic data and swelling fuel stockpiles outweighed OPEC+ progress on delaying production increases, highlighting ongoing market uncertainty. Image by LeArchitecto via iStock
Oil fell 2% to settle below $69 a barrel as tepid US economic data undercut OPEC+'s progress on a deal to keep output constrained.
The decline comes after crude futures tested their 50-day moving average, a key level that had spurred some technical buying. But slowing US services activity growth and swelling fuel stockpiles -- both signals of weak demand -- weighed on the market.
"The failure of WTI to hold above $70 and its 50-day moving average reinforces these levels as resistance," said Rebecca Babin, senior energy trader at CIBC Private Wealth Group. "Additionally, volumes today are significantly lighter than the 10-day average, indicating this could be a 'wait-and-see' market as we approach year-end."
Crude has been locked in a band of roughly $6 since the middle of October, buffeted by the imminent Donald Trump presidency, geopolitical tensions in the Middle East and Ukraine, and a lackluster demand outlook from top importer China. Mixed energy data from the US on Wednesday further muddied the picture, with weak diesel demand and record oil production offsetting a surprise draw in crude inventories.
Still, fresh US sanctions on Iran's shadowfleet, and an expected agreement by OPEC+ nations to delay production increases for another three months are keeping a floor under prices. OPEC+ is due to finalize supply plans at an online meeting on Thursday.