WTI turns back on Gaza ceasefire negotiations after early rise on supply constraints

• Crude Oil sees rough action on Thursday as geopolitics weigh on price.
• Odds are increasing of a negotiated ceasefire in Gaza.
• EIA, API Crude OIl barrel counts mix, show net drawdown.

West Texas Intermediate (WTI) US Crude Oil fell back to around $74.00 per barrel on Thursday after an early spike into $79.00 as markets look for signs that global Crude Oil supply may begin to crack under rising global barrel demand. Progress on a ceasefire negotiation between Israel and Hamas being brokered in Qatar has energy prices leaning into the softer side as markets head into the Friday market session.

Crude Oil markets shrugged off a hawkish Federal Reserve on Wednesday that knocked back hopes of early rate cuts, and Crude Oil pinned into the top end after the Organization of the Petroleum Exporting Countries (OPEC) announced Thursday there would be no changes to their announced production cap reduction of 2.2 million barrels per day in 2024. OPEC is attempting to backstop rising global Crude Oil production predominately powered by record-setting production levels from the US, and energy markets rallied on the headlines that OPEC would try to exacerbate potential supply imbalances in the future by intentionally undercutting global demand for Crude Oil.

Despite OPEC’s firm dedication to Crude Oil production cuts, key member states are beginning to feel the bite of letting pumping stacks grow cold. Saudi Arabia saw its economy decline 0.9% YoY with fourth-quarter Gross Domestic Product (GDP) declining 3.7% compared to the same time last year as declining Crude Oil activity strips out growth from underneath Saudi Arabia’s feet. Crude Oil activity accounts for nearly 42% of Saudi Arabia’s GDP.

Negotiations of a ceasefire, at least temporarily, are rumored to be nearing finalization as representatives from Israel and Hamas meet with adjudicating nations in Qatar, driving Crude Oil bids lower as the Middle East is set to see at least a short-lived reprieve from ongoing geopolitical tensions.

WTI Technical outlook

WTI Crude Oil saw a sharp decline drag US barrel bids below the 200-hour Simple Moving Average (SMA) near $76.00, and WTI is testing the $74.00 per barrel neighborhood at its lowest bids in a week.

US Crude Oil has declined nearly 7% from a near-term peak at $79.19, and downside momentum has WTI firming up a downside rejection from the 200-day SMA just shy of the $78.00 handle.

WTI hourly chart

WTI daily chart