- WTI oil remains near $75, it failed to surpass $80 on Thursday.
- The dollar remains stable this week and could post a positive performance following Powell’s comments.
- Oil could fall now that markets are not convinced that oil prices will continue to rise.
Oil prices are not performing at their best since November through Thursday. OPEC+ has failed to cement a price floor and has seen its image diminished by the division over the distribution of the burden of production cuts, leaving Russia with the bill. The biggest headlines came right at the end of the meeting, when Brazil submitted an offer to join the alliance.
For its part, the US Dollar (USD) has soared and erased all of last week’s losses. With one day of trading left, the Dollar Index (DXY) could close the week in green. All eyes will be on the president of the US Federal Reserve (Fed), Jerome Powell, who will speak twice this Friday before the official Fed blocking period prior to his latest decision on rates for 2023 .
Crude oil (WTI) is trading at $75.99 per barrel and Brent at $80.59 per barrel at the time of writing.
Oil news and market movements: OPEC+ suffers an image blow
- Brazil will join the OPEC+ alliance from January 2024, although it will participate in the cooperation and is not obliged to any production cuts.
- India reinforces its oil imports with the resumption of Venezuelan oil imports after three years of drought.
- More news from India, which has increased its oil imports from Russia and Iraq in the last month as refiners look for value amid rising production demand.
- Market analysts are very skeptical after the OPEC+ meeting on Thursday. The cuts are not enough and remain voluntary, which is not enough to create a substantial floor in the price of oil.
- COP28 is now being held in Dubai and all the big state leaders have arrived overnight. Headlines are expected to emerge throughout this Friday and into the weekend.
Oil Technical Analysis: More selling pressure to come
Oil prices have had a crazy Thursday, although if we look back the credibility of OPEC+ has been diminished. The fact that Russia has had to step in and take on a third of the supply cuts, bypassing Angola and Nigeria who refused to comply with any kind of production cuts, shows that the group lacks a leader capable of creating momentum and taking decisive decisions. Markets expect oil to head further south as the placement of a price cap by OPEC+ has failed and will see more recession starting this week.
To the upside, $80.00 is the resistance to watch out for. Should crude oil break through this resistance, the next level where some selling pressure or profit taking will be seen will be $84.00 (purple line). If oil prices consolidate above this level, the top of this decline near $93.00 could come back into play.
To the downside, a weak bottom is forming near $74.00. This level is acting as the last line of defense before entering $70.00 and below. Pay attention to $67.00, with the June triple bottom as the next support level for trading.
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WTI Crude Oil: Daily Chart
WTI Oil FAQ
What is WTI oil?
WTI oil is a type of crude oil that is sold in international markets. WTI stands for West Texas Intermediate, one of the three main types that include Brent and Dubai crude. WTI is also known as “light” and “sweet” for 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 through the Cushing facility, considered “the pipeline junction of the world.” It is a benchmark for the oil market and the price of WTI is frequently quoted in the media.
What factors determine the price of WTI oil?
Like all assets, supply and demand are the main factors that determine the price of WTI oil. As such, global growth can be a driver of increased demand and vice versa in the case of weak global growth. Political instability, wars and sanctions can alter supply and impact prices. The decisions of OPEC, a group of large oil-producing countries, is another key price factor. The value of the US Dollar influences the price of WTI crude oil, as oil is primarily traded in US dollars, so a weaker Dollar can make oil more affordable and vice versa.
How do inventories influence the price of WTI oil?
Weekly oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence the price of WTI oil. Changes in inventories reflect the fluctuation of supply and demand. If the data shows a decline in inventories, it may indicate an increase in demand, which would drive up the price of oil. An increase in inventories can reflect an increase in supply, which drives down prices. The API report is published every Tuesday and the EIA report the next day. Their results are usually similar, with a difference of 1% between them 75% of the time. EIA data is considered more reliable since it is a government agency.
How does OPEC influence the price of WTI oil?
OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 oil-producing nations that collectively decide member countries’ production quotas at biannual meetings. Their decisions often influence WTI oil prices. When OPEC decides to reduce quotas, it can restrict supply and drive up oil prices. When OPEC increases production, the opposite effect occurs. OPEC+ is an expanded group that includes ten other non-OPEC member countries, including Russia.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
