Crude oil futures weekly recap, December 29 – January 2

West Texas Intermediate and Brent crude fell on Friday, capping a sixth consecutive weekly decline, as official data showed rising supplies from Russia and Iraq at times of ever-growing US output and OPEC resisting calls to cut output, while manufacturing activity in China and Europe stalled.

US crude for delivery in February slid 1.09% on Friday to settle the week 3.73% lower at $52.69, the lowest close since April 30th, 2009. Prices dropped to $52.03 on Friday, the lowest since May 2009, while weekly high stood at $55.74, touched on Monday. US crude plunged 46% in 2014.

Meanwhile on the ICE, Brent for settlement in the same month fell 1.59% on Friday to close the week 5.1% lower at $56.42, also the lowest since April 30th, 2009. Prices shifted in a weekly range of $55.48-$60.43. Brent settled at a premium of $3.73 to its US counterpart. Prices fell 48% in 2014.

Oil supplies from Russia and Iraq rose to the highest in decades in December, data from both countries’ governments showed, underscoring their determination to keep market share despite the current supply-demand imbalance. Russian oil output jumped 0.3% to 10.667 million barrels per day in December, a post-Soviet record, data by the Energy Ministry showed, while Iraq shipped 2.94 million bpd last month, the most in three decades, Oil Ministry spokesman Asim Jihad said.

Removing a minor support, a spokesman for the state-run National Oil Corp. said that the final two burning crude tanks were extinguished at Libya’s largest oil port, Es Sider. The fires burst on December 25th when Islamist militants shot rockets at the export terminal in a second attempt to capture it.

Oil prices have halved since June amid speculations that weaker global economic growth will fail to soak rising global supply, led by US shale production, and as OPEC resisted calls to cut output in order to defend its market share.

Subdued manufacturing activity

John Kilduff, a partner at Again Capital LLC, said for Bloomberg: “We’re seeing more of the same. The Chinese and European PMI figures signal weaker demand, while there’s ever-increasing supply. Nobody is cutting back on output and now the Russians are posting post-Soviet production highs.”

Germany’s manufacturing sector grew in December after contracting the previous month, with the corresponding PMI coming in at an expected 51.2, while Spain posted slower-than-projected growth. Italy’s manufacturing activity shrank for a second month and France remained firmly in the contraction zone. The Eurozone as a whole saw its manufacturing gauge jump to 50.6 from 50.1 in November, but trailed projections for an increase to 50.8.

Government data showed on Thursday that China’s manufacturing sector grew at the slowest pace in 18 months, with the official PMI hitting 50.1 from 50.3 in November, while a private gauge earlier in the week slid to 49.6 from 50.0 the previous month. Non-manufacturing PMI inched up to 54.1 from 53.9 in November, Chinas National Bureau of Statistics reported.

Moreover, manufacturing in the US cooled in December as well. The Institute for Supply Managements factory activity index slid to a six-month low of 55.5 from 58.7 in November, underperforming analysts expectations for a moderate drop to 57.6. Still, this was the 19th straight month of expansion for the US manufacturing sector.

Weighing on dollar-denominated commodities across the board, the US dollar index rose 0.8% on Friday, capping a third straight weekly gain, thanks to a weaker euro.

OPEC, US output

According to a Bloomberg survey of analysts, companies and producers, OPEC pumped 122 000 barrels per day of crude less in December from a month earlier. However, at 30.24 million bpd, the oil cartels production pace was still above its official target of 30 million bpd.

In the US, crude output inched lower to 9.121 million bpd in the week ended December 26th, compared to 9.127 million a week earlier. Output was at the highest in more than three decades during the seven days ended December 12th.

The Energy Information Administration also reported on Wednesday that US crude inventories slid by 1.754 million barrels to 385.5 million, compared to projections to remain mostly unchanged. However, supplies at the Cushing, Oklahoma storage hub surged by 2 million barrels to 30.8 million, the most since February.

Imports fell by 1.231 million bpd to 7.061 million last week, while the four-week average of inbound shipments was at 7.531 million bpd, 1.7% higher compared to a year ago.

Refinery utilization rates jumped to 94.4% from 93.5% during the preceding period, with both gasoline and distillate fuel output rising to average 10.2 million and 5.3 million bpd, respectively. Motor gasoline inventories jumped by 2.951 million barrels to 229.0 million, exceeding projections for a 2.130-million jump, while distillate fuel stockpiles rose 1.874 million barrels to 125.7 million. Analysts had forecast an increase of 1.530 million.

Inventories at Cushing, Oklahoma might begin to drop as the new Seaway Twin pipeline was completed, Enterprise Products Partners said on December 31st, cited by Bloomberg. It more than doubles capacity from Cushing to the Gulf Coast.

Pivot points

According to Binary Tribune’s daily analysis for Monday, West Texas Intermediate February futures’ central pivot point is at $53.28. In case the contract breaches the first resistance level at $54.52, it may rise to $56.36. Should the second key resistance be broken, the US benchmark may attempt to advance $57.60.

If the contract manages to breach the first key support at $51.44, it might come to test $50.20. With this second support broken, movement to the downside could continue to $48.36.

Meanwhile, February Brent’s central pivot point is projected at $56.81. The contract will see its first resistance level at $58.15. If breached, it may rise and test $59.87. In case the second key resistance is broken, the European crude benchmark may attempt to advance $61.21.

If Brent manages to penetrate the S1 level at $55.09, it could continue down to test $53.75. With the second support broken, downside movement may extend to $52.03 per barrel.