WTI struggles to praise OPEC+ output cut, Russia-led tension below $90.00
- WTI crude oil fades two-day rebound despite risk-on mood.
- OPEC+ announced ‘small’ output cut, Russia warns of selling more oil to Asia on price cap.
- China-linked headlines join central bank chatters and recession woes to weigh on energy prices.
- US ISM Services PMI, details of the stimulus from UK/Europe will be important too.
WTI crude oil buyers fail to cheer the OPEC+ output cut, nor the mildly positive sentiment, as the quote drops to $88.25 during Tuesday’s Asian session. In doing so, the black gold also ignores the stimulus hopes and the recent warning from Russia.
That said, the Organization of the Petroleum Exporting Countries and allies including Russia, known collectively as OPEC+, have agreed to lower oil output targets by 100,000 barrels per day in October. “The decision essentially maintains the status quo as OPEC has been observing wild fluctuations in oil prices,” stated Reuters after the release.
Elsewhere, fears of a blockade of Russian oil, due to the Western price cap, also receded after Russia Energy Minister Nikolai Shulginov stated, per Reuters, “Russia will respond to price caps on Russian oil by shipping more supply to Asia.”
It should be noted that the UK is up for £130 billion energy plan while Germany braces for a big move to help energy companies battle the latest jump in the oil prices due to the Russia-Ukraine tussles. Furthermore, Europe also eyes stimulus measures to overcome the energy crisis that hints at the economic recession in the bloc. “European Union governments are pushing through multi-billion euro packages to prevent utilities buckling under a liquidity squeeze and to protect households from soaring energy bills,” said Reuters.
It’s worth observing that the US-China tension, recession woes and the central bank aggression towards higher rates weigh on the black gold prices.
While portraying the mood, the US 10-year Treasury yields rise 2.1 basis points (bps) to 3.21% whereas the S&P 500 Futures extend the week-start recovery to 3,953, up 0.75% intraday by the press time.
Looking forward, chatters surrounding the stimulus and other risk catalysts could entertain the WTI traders ahead of the US ISM Services PMI for August, expected 55.5 versus 56.7 prior.
Technical analysis
WTI crude oil’s failure to cross the 10-day EMA hurdle surrounding $89.70 joins sluggish MACD to tease sellers targeting the $85.80-40 support zone comprising lows marked during August and so far during September.