Oil bears feel pinch of OPEC+’s output cuts
2023-09-05
Summary:
Oil prices rose Monday on OPEC+ supply expectations and the possibility of the Fed ending aggressive rate hikes.
Oil prices edged higher on Monday on expectations that OPEC+ would keep supplies tight and speculation that the Fed will cease its aggressive interest rate hike campaign.
Both benchmarks have bounced back from their June lows with Brent adding about 3 % and WTI advancing more than 6.6% since the beginning of the year.
Saudi Arabia is widely expected to extend its voluntary 1 million bpd cut for a fourth consecutive month into October.
The kingdom’s crude exports stood at 5.47 million bpd in the first 27 days of August, the lowest level since April 2021, UBS said last week.
Global crude oil supplies are expected to improve in the next six to eight weeks because of refinery maintenance, although sour crude will stay tight, said Russell Hardy, chief executive of the world's largest independent oil trader, Vitol.
China has been taking advantage of price cycles to build inventories even it is pushing for electrification and plans to run its electric vehicle fleet on domestic coal-fired power, he added.
WTI oil settled near the important resistance. RSI edges close to the overbought territory, but there is enough room for animal spirits without signs of profit-taking.
The bullish trend scenario that has been supported by the EMA50 since late August will remain valid and active in the short term.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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