WTI crude price falls below $70 as dollar strengthens and Nigerian oil sector evolves
WTI crude dips under $70 as dollar rises and Nigeria reshapes oil sector
WTI crude oil futures dipped below $70 per barrel on Thursday, reversing previous gains. A robust US dollar, fueled by the Federal Reserve's hawkish rate cut stance, added pressure on the dollar-denominated commodity.
This development coincided with signals from the Energy Information Administration (EIA), reporting a 1-million-barrel drop in US crude inventories last week, extending a 1.4-million-barrel decline from the previous week. However, concerns persist over non-OPEC+ supply growth from the US, Canada, and Brazil.
USOIL chart ( Nov 2024 - Dec 2024) Source: Trading View
Nigerian Oil Market Reshapes After $2.4 Billion Asset Sale
Nigeria’s oil sector took a significant turn after its government approved Shell Plc's $2.4 billion asset sale to Renaissance Group. This decision comes after months of uncertainty following Nigeria’s initial rejection of the sale due to concerns over oil spills and theft.
The assets include an estimated 6.73 billion barrels of oil and 56.27 trillion cubic feet of gas reserves. The approval follows Shell’s commitment to the long-awaited Bonga North deepwater project, expected to reach peak production of 110,000 barrels per day by the decade's end.
Technical Outlook: Oil Faces Key Resistance Levels
WTI crude oil’s daily chart reveals a bearish hammer pattern forming near the $71.40 resistance level, within a triangular consolidation pattern. The 4-hour chart highlights a neutral trend, with prices rebounding near a black-dotted trendline. For upward momentum, oil prices must break above $71.40 and $72.50, signaling the next potential move.
As oil markets navigate geopolitical developments and shifting supply dynamics, traders will closely watch Nigeria’s production strategies and further US dollar movements for potential price shifts.
Previously, we discussed oil prices climbing above $70 per barrel following a sharp US crude inventory draw and ongoing OPEC+ output concerns.
