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More Weakness to Come for Crude?

NYMEX_DL:CL1!   Light Crude Oil Futures
Crude oil has experienced a decline of over $13 from its 2023 highs, reflecting traders' anticipation of weaker economic growth and a slowing consumer. Despite OPEC's announcement of additional production cuts and the ongoing efforts of member countries to defend prices throughout the year, it is evident that the market is bracing for diminished demand.

Recent Developments:

Recent figures from the Atlanta Fed GDP Now model for Q4 reported a growth rate of 1.2%, falling short of the expected 1.8%. Additionally, this week's JOLTs numbers for Job Openings came in at 8.73 million, below the expected 9.3 million, and ADP Non-Farm Payrolls on December 6th registered 103k, lower than the anticipated 130k. These indicators indicate emerging signs of a weakening labor market, prompting expectations of interest rate cuts as early as March 2024.

More Selling to Come?

The occurrence of the Death Cross, observed in the crude market on November 30th when the 50-Day EMA crossed below the 200-Day EMA, suggests potential further downside momentum. While technical analysis indicates the likelihood of additional downward movement, significant support is anticipated at the psychologically significant $70 level. Continued weakness in economic data could, however, pose challenges for crude's ability to maintain support in the near term

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