WTI defends downside near $70.00 as Saudi’s fresh oil cuts disturb supply-demand mechanism

The oil price has extended its recovery above $73.20 as fresh supply cuts would impact the demand-supply parity.
Higher odds of a stable Fed policy and a recovery in Chinese factory activity are supporting the oil price.
The investing community is divided between a higher United States Unemployment Rate and higher payroll additions.

Sagar Dua FXStreet

West Texas Intermediate (WTI), futures on NYMEX, rebounded firmly after defending the downside near $72.22 in Asia. The oil price has extended its recovery above $73.20 in Europe as the announcement of fresh cuts in oil production solely by Saudi Arabia is going to tweak the current supply-demand mechanism.

On the weekend, Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, said on Sunday, “Saudi Arabia to make extra 1 million b/d output cut from July.” He further added the Kingdom will extend its 500k barrels per day (b/d) voluntary cut until the end of 2024.

The continuous decline in oil prices by the oil cartel in a way to provide cushion to energy prices indicates that the oil demand outlook is extremely bleak and back-to-back supply cuts are the only method for supporting prices.

In China, recovery in factory activity communicated by IHS Markit through Caixin Manufacturing PMI has fueled some optimism among investors. The economic data managed to defend the 50.0 threshold and landed at 50.9, higher than the consensus and the prior release of 49.5. Investors should note that China is the largest importer of oil in the world and higher manufacturing activity in China strengthens the oil demand outlook.

Meanwhile, the US Dollar Index (DXY) is hovering near its intraday high around 104.32 as hawkish Federal Reserve (Fed) bets are consistently providing the required support. The investing community is divided between a higher United States Unemployment Rate and higher payroll additions. According to the CME Fedwatch tool, more than 86% of the chances are in favor of a stable interest rate decision.

WTI US OIL

Overview
Today last price	73.24
Today Daily Change	1.33
Today Daily Change %	1.85
Today daily open	71.91

Trends
Daily SMA20	71.8
Daily SMA50	74.78
Daily SMA100	75.71
Daily SMA200	79.07

Levels
Previous Daily High	72.21
Previous Daily Low	70.06
Previous Weekly High	73.58
Previous Weekly Low	67.12
Previous Monthly High	76.61
Previous Monthly Low	64.31
Daily Fibonacci 38.2%	71.39
Daily Fibonacci 61.8%	70.88
Daily Pivot Point S1	70.58
Daily Pivot Point S2	69.24
Daily Pivot Point S3	68.43
Daily Pivot Point R1	72.73
Daily Pivot Point R2	73.55
Daily Pivot Point R3	74.88

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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