WTI defends $87 amid OPEC+ output cuts, impending bear cross


  • WTI consolidates the three-day rally above the $87 mark on Thursday.
  • Investors digest the 2M barrels/day OPEC+ output cuts and EU price cap on Russian oil.
  • Drawdown in EIA crude stockpiles also supports the black gold amid a weaker US dollar.

WTI has entered a phase of upside consolidation while defending the $87 mark so far this Thursday, moving slightly away from three-week highs of $87.78.

The retreat in the black gold could be attributed to profit-taking after a three-day staggering rally. Also, bulls take a breather ahead of the all-important US Nonfarm Payrolls release, which could have a significant impact on the dollar valuations, and eventually affect the USD-sensitive oil.

Further, a Wall Street Journal (WSJ) report that the US intends to ease sanctions against Venezuela, allowing Chevron to resume oil production, is exerting bearish pressures on WTI.

The US oil has gained roughly 10% so far this week, with the recent upside fuelled by the OPEC+ output cuts announced on Wednesday. Joint Ministerial Monitoring Committee (JMMC) of the OPEC and allies including Russia, known collectively as OPEC+, agreed to cut oil production by 2 million barrels per day, per Reuters.

In response to the OPEC+ move, the White House said that US President Joe Biden is disappointed by the OPEC+ group's 'shortsighted decision'.

The black gold also found some support from a decline in the US crude oil and fuel stockpiles, according to the weekly data published by the Energy Information Administration (EIA). US commercial crude oil stocks dropped by 1.356 million barrels against expectations for a build of 2.052 million barrels.

Further, the European Union’s (EU) agreement to impose a price cap on Russian oil also boded well for the commodity price. Looking ahead, geopolitical tensions and the US employment data will hold the key to a fresh trading impetus in oil price.

On a daily timeframe, WTI is battling the bearish 50-Daily Moving Average (DMA) located at $87.45. Daily closing above the latter will kick in a fresh upswing towards the next horizontal trendline resistance placed at $89.65.

The 14-day Relative Strength Index (RSI) is holding firmer above the midline, suggesting that there is more room to the upside.

However, a potential 100 and 200 DMAs bearish crossover could temper the upbeat momentum. In case the bear cross materializes, then the price could drop back towards the $85 mark.

WTI: Daily chart

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

AUD/USD: A tough barrier remains around 0.6800

AUD/USD: A tough barrier remains around 0.6800

AUD/USD failed to maintain the earlier surpass of the 0.6800 barrier, eventually succumbing to the late rebound in the Greenback following the Fed’s decision to lower its interest rates by 50 bps.

AUD/USD News
NZD/USD advances to near 0.6200 due to risk-on mood, Fed interest rate decision awaited

NZD/USD advances to near 0.6200 due to risk-on mood, Fed interest rate decision awaited

The NZD/USD pair edges lower to near 0.6200 during the early Asian session on Thursday. The recent GDP data revealed that New Zealand's economy shrank again in the second quarter, suggesting the depths of its economic malaise.

NZD/USD News
Gold surrenders gains and drops to weekly lows near $2,550

Gold surrenders gains and drops to weekly lows near $2,550

Gold prices reverses the initial uptick to record highs around the $$2,600 per ounce troy, coming under renewed downside pressure and revisiting the $2,550 zone amidst the late recovery in the US Dollar.

Gold News
Australian Unemployment Rate expected to hold steady at 4.2% in August

Australian Unemployment Rate expected to hold steady at 4.2% in August

The Australian Bureau of Statistics will release the monthly employment report at 1:30 GMT on Thursday. The country is expected to have added 25K new positions in August, while the Unemployment Rate is foreseen to remain steady at 4.2%.

Read more
Ethereum could rally to $2,817 following Fed's 50 bps rate cut

Ethereum could rally to $2,817 following Fed's 50 bps rate cut

Ethereum (ETH) is trading above $2,330 on Wednesday as the market is recovering following the Federal Reserve's (Fed) decision to cut interest rates by 50 basis points. Meanwhile, Ethereum exchange-traded funds (ETF) recorded $15.1 million in outflows.

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Forex MAJORS

Cryptocurrencies

Signatures