Oil flat while Saudi Arabia is only OPEC member left behind to comply with production cuts
- WTI Oil dips on Monday as supply ramps up.
- Libya opens up its biggest oilfield after a two-week halt due to an outage.
- The US Dollar Index faces selling pressure and could slide lower this week.
Oil prices are nearly flat this Monday with no new developments in the Red Sea and with Libya’s state-run National Oil Corporation opening up its biggest Oil field. This means an additional production of 270,000 barrels per day, putting overall output back above 1 million barrels per day for the OPEC country. Prices are paring back losses though ahead of the US opening bell, with oil near flat while suppy returns to normal.
Meanwhile, the DXY US Dollar Index is facing some selling pressure from a technical point of view. The index posted lower highs and lower lows on the daily chart, signalling that the US Dollar is set to slide lower soon. On the economic data front this week, traders will face the US Gross Domestic Product (GDP) print and the Fed’s preferred inflation index, the Personal Consumption Expenditure (PCE) Price Index.
Crude Oil (WTI) trades at $73.55 per barrel, and Brent Oil trades at $78.48 per barrel at the time of writing.
- Oil news and market movers: Libya adds supply
- Libya’s Sahara field has restarted its production after a two-week halt, putting the country back above 1 million barrels per day on output, Bloomberg reported.
- Chinese Oil data shows Russia has become the main supplier for the Asian country.
- Chinese demand surged by 8.6% to 14.24 million barrels per day.
- China kept its Prime Loan rates again unchanged on Monday, while markets anticipated further easing in order to support the economy. This could mean demand for Oil could abate in the coming months.
- Crude loadings at Ust-Luga, the Russian Baltic port, have resumed after being halted due to a drone attack.
Oil Technical Analysis: Saudi Arabia left behind
Oil prices are struggling with again an OPEC member defying the production cuts Saudi Arabia is enforcing. After Russia already breached its production cut commitments, Libya is adding more supply as its biggest Oil field comes back online, putting the country back above 1 million barrels per day in production.
On the upside, $74 continues to act as a line in the sand after a failed break above it on Friday. Although quite far off, $80 comes into the picture should tensions build further. Once $80 is broken, $84 is next on the topside.
Below $74, the $67 level could still come into play as the next support to trade at, as it aligns with a triple bottom from June. Should that triple bottom break, a new lowcould be close at $64.35 – the low of May and March 2023 – as the last line of defence. Although still quite far off, $57.45 is worth mentioning as the next level to keep an eye on if prices fall sharply.
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US WTI Crude Oil: Daily Chart
WTI Oil FAQs
What is WTI Oil?
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.
What factors drive the price of WTI Oil?
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.
How does inventory data impact the price of WTI Oil
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.
How does OPEC influence the price of WTI Oil?
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.
Author
Filip Lagaart
FXStreet
Filip Lagaart is a former sales/trader with over 15 years of financial markets expertise under its belt.
