WTI rises to $17.50 as Kuwait cuts output
- WTI jumps 5% in Asia, having found bids below $16.00 during the overnight trade.
- Kuwait has voluntarily cut output in response to the current market conditions.
- The recently signed OPEC+ deal will take effect on May 1.
West Texas Intermediate (WTI) is flashing green on Friday with OPEC's number four producer reducing oil output in response to market conditions.
At press time, a barrel of WTI oil is changing hands at $17.25 per barrel, up 5% on the day, having bounced up from $15.80 to $17.56 during the overnight trade. Prices, however, are still trading below $18.26 during Thursday's North American trading hours. Meanwhile, Brent oil is trading near $22, representing a 1% gain on the day.
While the recently agreed OPEC+ deal to cut output by 9.7 million barrels per day is set to take effect on May 1, OPEC's fourth-largest producer, Kuwait, has already started to reduce supply to markets. "Kuwait has cut output voluntarily sensing a responsibility responding to market conditions," Kuwait’s Oil Minister Khaled Al-Fadhel told the official state Kuwait News Agency (KUNA) on Thursday.
Most analysts, however, are of the opinion that the OPEC+ output cuts won't be enough to compensate for the coronavirus-led demand destruction and the rise in inventory levels. Nevertheless, output cuts may put a floor under prices and slow down its descent.
From a technical analysis standpoint, WTI's bounce from lows seen earlier this week has taken the shape of a rising wedge pattern, a bearish reversal pattern. A breakdown, if confirmed, would imply an end of the corrective rally and shift risk in favor of a drop to levels below $10.
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
