- WTI Oil soars on the back of rumors that African countries are unwilling to sign the current deal on the table.
- The US Dollar is trying to turn around recent declines after it hit a fresh three-month low.
- Oil to rally further ahead of OPEC+ on Thursday when more details will leak on production cuts.
Oil prices are off the lows and are soaring above $77 on Wednesday. Rumors remains the main driver as Nigeria and Angola remain reluctant to sign the deal on the table. The big issue at hand earlier, was that African countries were vetoing any production cuts they needed to make after Saudi Arabia asked all OPEC+ members to make efforts to ease the supply side.
The US Dollar (USD) fell out of bed on Tuesday and saw its descent eke out more losses. The catalyst which triggered the latest leg lower was Fed member Christopher Waller, who surprised markets with a very dovish tilt. US Yields dropped, and ticked the next domino in a spillover effect, which saw a devaluing US Dollar and a US Dollar Index (DXY) printing a fresh 3-month low.
Crude Oil (WTI) trades at $77.58 per barrel and Brent Oil trades at $82.42 per barrel at the time of writing.
Oil news and market movers: OPEC+ stalls
- In a developing story this Wednesday ahead of the US opening bell, headlines are coming out that Angola and Nigeria are refusing to take any production cuts.
- Saudi Arabia has demanded from all OPEC+ members to cut its production in order to create a substantial floor in current Oil prices and to provide a reply to the current decline in demand.
- Saudi Aramco is forecasted to cut prices for Oil deliveries to Asia for the first time since June as cheaper US Oil and lagging European demand drives up competition with lower prices in the region.
- The overnight numbers from the American Petroleum Institute on US stockpiles, revealed a small draw down of 817,000, coming from a previous build of 9.047 million last week. A bigger draw down of 2 million was expected.
- This Wednesday near 15:30 GMT the Energy Information Administration (EIA) is expected to reveal a draw down of 933,000 barrels. Last week a massive build up of 8,701 million was at hand.
Oil Technical Analysis: Prices jump higher
Oil prices may have reached the end of the line in their downtrend for now. Prices are starting to advance again on rumours that a joint OPEC+ supply cut package is on the table and close to being adopted by each party. Expect to see more upturn on the back of this, though the length and strength will depend on the impact and broadness of the proposed package.
On the upside, $80.00 is the resistance to watch out for. Should crude be able to jump above that again, look for $84.00 (purple line) as the next level to see some selling pressure or profit taking. Should Oil prices be able to consolidate above there, the topside for this fall near $93.00 could come back into play.
On the downside, traders are seeing a soft floor forming near $74.00. This level is acting as the last line of defence before entering $70.00 and lower. Watch out for $67.00 with that triple bottom from June as the next support level to trade at.
US WTI Crude Oil: Daily Chart
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Source: https://www.fxstreet.com/news/oil-soars-for-a-second-day-as-rumours-build-up-towards-opec-meeting-202311291145