Amid OPEC+ production cuts, West Texas Intermediate (WTI) crude futures ascend past $95, marking a significant Crude Oil News event.
U.S. oil prices reached a new peak in over a year early Thursday, as West Texas Intermediate crude futures (WTI) soared above $95 per barrel. This rise was triggered by a significant decline in U.S. crude stocks and mounting concerns about limited global supplies due to OPEC+ production cuts spearheaded by Saudi Arabia.
Recent data reveals that U.S. crude stocks plummeted by 2.2 million barrels last week, a figure vastly surpassing the predicted 320,000-barrel drop. The Cushing, Oklahoma storage hub has also seen its stockpile decrease by 943,000 barrels, nearing historic low levels. This decline in reserves at Cushing has been attributed to robust refining and export demands, raising concerns about the quality and sufficiency of remaining oil.
OPEC+, led by Saudi Arabia and Russia, has curtailed production by 1.3 million barrels a day until the year-end. As global oil prices soar, there are speculations about a possible reconsideration of these supply cuts in the group’s upcoming October 4th meeting. These reductions, coupled with additional export restrictions proposed by Russia, hint at a tight global energy market in the foreseeable future.
The recent surge in energy prices has also stimulated oil and gas activity in three key U.S. states, according to a survey by the Federal Reserve Bank of Dallas. Furthermore, initiatives like Russia’s recent export restrictions, aimed at stabilizing domestic fuel prices, further emphasize the global narrative of tightening oil supply.
Despite last week’s dip in prices, the market remains bullish, primarily driven by concerns over limited supplies as winter approaches. Analysts are divided with some sensing the market is overextended and foreseeing a potential correction. Yet, the overarching sentiment leans towards higher oil prices, at least in the short-term, given the prevailing supply constraints and growing demand.
Based on the tools on analytical tools on the chart provided for Light Crude Oil Futures, the current daily price of 94.55 shows an appreciation from the previous day, sitting between the minor resistance at 92.49 and the main resistance at 97.67.
Although above both the 200-day and 50-day moving averages, suggesting an ongoing bullish trend, the 14-Day RSI reading of 79.31 indicates overbought conditions.
This could imply potential future price adjustments. However, predicting the exact directionality poses challenges with momentum so strong. Presently, market sentiment leans bullish, but traders should remain wary of possible pullbacks, especially given the elevated RSI.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.