The price of WTI crude Oil has experienced a rapid increase in a month, from around $67 at the end of July to above $80 yesterday, benefiting from a n
The price of WTI crude Oil has experienced a rapid increase in a month, from around $67 at the end of July to above $80 yesterday, benefiting from a number of factors, which have lined up nicely. One of these factors is the growing economic optimism, which is a result of promises from Chinese authorities to help the economy with monetary and fiscal policies, while some US data has been showing resilience, such as the higher Q2 GDP report we saw yesterday, together with a jump in retail sale in June and lower jobless claims, which shows that the employment sector is tight.
Yesterday WTI briefly rose above $80 but later retreated to around $79 due to profit-taking and USD strength. However, we decided to buy the fullback and today it has since regained its momentum and is trading near the day’s highs.
The market’s focus is now on whether Saudi Arabia will extend its voluntary production cut of 500,000 barrels per day, which is in addition to the mandatory OPEC+ cuts. While some analysts believe an extension is already priced into the market, a Bloomberg poll shows that 15 out of 22 analysts expect the extension to run until September.
However, the remaining 7 analysts who don’t expect an extension represent a significant minority, indicating some uncertainty in the market. The decision on the extension may be revealed after the JCPOA meeting on August 4, following the previous extension that took place in early July. There is a possibility that the extension could be tapered to a lower level, such as 250,000 barrels per day.
Currently, the market is supported by expectations of Chinese stimulus and stronger economic growth in the US, acting as significant tailwinds. From a technical standpoint, the resistance level is seen at the April high of $83.53, but the recent break above the 200-day moving average is viewed as a bullish signal.
As always, it’s important for traders and investors to keep an eye on any further developments regarding Saudi Arabia’s production cut decision and other relevant economic indicators that may impact the price of oil.
WTI
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