On Friday (December 6th), US crude oil experienced a slight decline during the Asian trading session, trading around $68.05 per barrel. OPEC+has postponed its production increase plan until April 2025, and the full lifting of production cuts has been postponed until the end of 2026.

However, the slowdown in global demand and the surge in production in countries outside the organization have further increased the pressure of oil prices on the demand side, so even if OPEC+delays production increases, it cannot support the upward strengthening of oil prices.

Although the US dollar index has slightly fallen, providing some support for oil prices, the bullish trend has passed and the fundamentals are difficult to improve under the pressure of demand. At the same time, the number of initial jobless claims in the United States has risen beyond expectations.

The market expects the US non farm payroll data to be relatively optimistic this time, causing the expectation of a Fed interest rate cut in December to swing again, which is not conducive to the strengthening of oil prices. In the short term, US crude oil will consolidate near the lower edge of the box, and we will observe whether bears will exert force to break down.

Focus on US non farm payroll data during the day.

The number of new initial jobless claims in the United States slightly increased last week, indicating a steady slowdown in the labor market as we enter the final stage of 2024

The US Department of Labor announced on Thursday that as of the week ending November 30th, the number of initial unemployment claims in various states increased by 9000, adjusted for seasonal factors, to 224000. The previous market forecast was 215000 people.

This data includes the Thanksgiving holiday, which may bring some noise to the report. The number of people applying for unemployment benefits is entering a period of fluctuation, which may make it difficult for people to have a clear understanding of the labor market.

Last week, the number of unadjusted applicants decreased by 34967 to 210166.

However, weak recruitment means that some unemployed people are receiving unemployment benefits for a longer period of time than at the beginning of this year, which may keep the unemployment rate above 4.0%.

Economists say that although progress in lowering inflation to the Federal Reserve's 2% target has stalled, this should provide evidence for the Fed to cut interest rates again this month.

Samuel Tombs, Chief US Economist at Pantheon Macroeconomics, said, "By long-term standards, the number of people applying for unemployment benefits is still low, but given the very limited number of recruits, the number of people applying for unemployment benefits is still high enough to continue the upward trend of unemployment rates

The "Beige Book" report released by the Federal Reserve on Wednesday stated that employment in various regions remained "flat or only slightly increased" in November. The report also pointed out that "recruitment activities have been suppressed, worker turnover rates remain low, and few companies have reported an increase in employee numbers

OPEC+delays production increase until April 2025

OPEC+, consisting of the Organization of the Petroleum Exporting Countries and allied countries including Russia, has been planning to lift production cuts starting from October 2024, but the slowdown in global demand and the surge in production outside the organization have forced it to postpone production cuts multiple times.

John Kilduff, a partner at Again Capital, said, "Before the meeting began, people had doubts about whether (OPEC+countries) had cohesion, but they made a unanimous decision, which also shows that they are facing a severe supply situation while striving to support the market

According to Reuters calculations, starting from April 2025, OPEC will gradually lift its production reduction plan of 2.2 million barrels per day, increasing by 138000 barrels per month for 18 months until September 2026. The oil production of OPEC+accounts for about half of the global total.

But analysts point out that the prospect of sufficient supply in 2025 offsets the support brought by OPEC+'s decision on Thursday.

OPEC+oil production accounts for about half of the global total. The alliance had planned to withdraw from the production cuts starting from October 2024, but the slowdown in global demand and the increase in OPEC+oil production have forced it to repeatedly postpone the plan.

Since June, they have been discussing this issue (increasing production), but are still delaying it, "said Bjarne Schieldrop, Chief Commodity Analyst at Nordic Bank (SEB) in Sweden. This means that there will be no upward space for oil prices in the coming years

Schieldrop stated that the oil market will now shift its focus to the actions of US President elect Trump, who may impose new sanctions on Iran, impose tariffs on Asian countries, and promise to end the war in Ukraine.

During his tenure as President of the United States from 2017 to 2021, Trump repeatedly criticized OPEC+for high oil prices and demanded that Saudi Arabia increase its oil supply if it hoped for US support in its fight against arch rival Iran.

Since 2022, OPEC+member countries have agreed to take a series of measures to support the market, including reducing production by 5.86 million barrels per day, or approximately 5.7% of global demand.

These measures include a reduction of 2 million barrels per day for the entire alliance, voluntary reduction of 1.65 million barrels per day by eight member countries in the first phase, and voluntary reduction of 2.2 million barrels per day by these member countries in the second phase.

According to the statement released by OPEC+on Thursday, the alliance has agreed to extend the production cuts of 2 million barrels per day and 1.65 million barrels per day from the end of 2025 to the end of 2026.

From a technical perspective, there is a possibility of breaking below the lower edge of the US crude oil daily box, as the Bollinger Bands turn downwards and prices drive the middle track down. At the same time, the KDJ indicator turns downwards. If it falls below around $66.80 within the day, it cannot be ruled out that bears may accelerate their downward trend.

Daily chart of US crude oil