Crude oil markets are experiencing significant downward pressure, primarily due to OPEC+'s recent decision to delay its output normalization by three months. This move, while expected, has not alleviated concerns about the ongoing supply glut in the market. As a result, oil prices have continued to slide, with West Texas Intermediate (WTI) crude trading at around $67.35 per barrel as of December 6, 2024. The persistent oversupply, coupled with the inability of OPEC+ to effectively address the issue, has led to increased selling pressure, particularly from algorithmic traders who are reacting to negative trend signals.
Additionally, the U.S. rig count has seen an uptick, with active rigs increasing by seven to 589, the highest level since mid-September. This rise in drilling activity further exacerbates the supply concerns, adding to the bearish sentiment in the oil markets. The U.S. Dollar Index has also softened slightly following the release of the U.S. Nonfarm Payrolls report, which came in above estimates but within the expected range, adding another layer of complexity to the market dynamics.
The ProShares UltraShort Bloomberg Crude Oil ETF (SCO) rose to $18.87, up 2.66% as of 3:04 PM ET on December 6th.