- Oil (WTI) goes sideways in the range between $88 to $93.
- The US Dollar consolidates a new six-month high and is set to close a tenth consecutive week in the green.
- Headline decline from Saudi Arabia or Russia guides oil prices in a calmer regime.
Oil prices are trading in a moderate manner which is more than welcome to the overheated rally in both WTI Crude and Brent oil prices. Traders will want to see the print of the Baker Hughes Rig Count later this Friday if it has bottomed out and a more gradual rise is being noticed with more rigs coming online. Some demand could pick up next week as recent reports show China crude inventories are at their lowest level since June.
The US Dollar (USD) had another strong day on Thursday, booking gains against nearly every major G20 currency. Backed by higher US yields, the Greenback advances in an environment where the rate differential seems to be the driving factor to determine which currency weakens and which appreciates. With the US 10-year yield hitting 4.51%, breaking above the high all the way back in October 2007, it looks like King Dollar is affirming its earned title.
Crude Oil (WTI) price trades at $90.77 per barrel, and Brent Oil trades at $93.38 at the time of writing.
Oil news and market movers
- Ford shares are jumping higher after United Auto Workers (UAW) union issued a statement saying progress has been made.
- JPMorgan Head of EMEA Energy Equity Research Christyan Malek has issued his call for $100 in oil prices with main drivers the reduction in spare capacity and rising production costs.
- The Canadian Loonie (USD/CAD) is set for a second week of gains as currently higher oil prices are strengthening the Canadian Dollar as important oil exporter.
- Nigerian crude exports are set to gain by 24% month-over-month for November. Recent data revealed near 580,000 barrels per day are set to be released against 468,000 barrels per day for October.
- Onshore Chinese crude inventories are at their lowest level since June. Meanwhile, China hit a record volume of Russian oil imports during August.
- Russia temporarily bans diesel exports, triggering a firm rise in European prices.
- The US Keystone crude pipeline is coming back online after a few days of outage.
- The weekly Baker Hughes US Oil Rig Count is due this Friday at 17:00 GMT. Previous number last week was at 515 and at 512. A gradual rise would be bearish for oil prices.
Oil Technical Analysis: Last blips
Oil prices are entering a bit of a calm path after the very steep and headline-driven moves seen in the past few weeks. At the moment it looks like WTI Crude price will fade ahead of making a new yearly high. A technical floor is identified and would cool down the Relative Strength Index (RSI) and might see crude breaking $93 later this year.
On the upside, the double top from October andNovember of last year at $93.12 remains the level to beat. Although this looks very much in reach, markets have already priced in a lot of possible supply deficits and a bullish outlook. Should $93.12 be taken out, look for $97.11, the high of August 2022.
On the downside, a new floor is formed near $88 with the high of September 5 and 11 underpinning the current price action. Proof of that already exists with the dip of September 21 that reversed ahead of $88. Should $88 break nonetheless, the peak of August 10 needs to be enough to catch the dip near $84.20.
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WTI US 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.
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