- WTI holding in bullish territories, despite geopolitics.
- Oil producers may meet earlier than previously planned to extend cuts to supply.
Oil is trading at $35.62 after the close on Wall Street on Monday, having rallied from a low of $34.30 to high of $35.87bbls as the spot market diverges from futures. Markets were bullish on Monday and the Dow added 92 points or 0.4%, but, despite that, oil futures settled lower on Monday.
The concerns for Beijing-Washington tensions raised concerns over the prospects for crude demand. However, a report that major oil producers may meet earlier than previously planned with intensions to possibly extend the current crude output cuts helped to keep spot prices elevated.
Short-term extension of OPEC+'s record supply cuts buoy market
A short-term extension of OPEC+'s record supply cuts, which are targeted to remove 9.7 million barrels per day is keeping the market buoyed. there is still no set date for the meeting so all ears are to the ground for the following sessions.
"Amid continued signals of firming demand, the extension of the current cuts could provide further convexity to the recovery in energy markets. Crude fundamentals remain on a tightening path throughout the summer, which will see inventory builds make way for draws, and support our long WTI Dec20-Dec21 spread," analysts at TD Securities explained.
Notwithstanding, the extremely battered momentum signals combined with the vol shock in the complex has resulted in a continued short-tilt among trend-following funds, albeit marginal in size. We do not expect significant flow from this group of participants.
WTI levels
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