WTI Oil Is Stuck Near $86 As Traders Wait For OPEC+ Decision

Key Insights

• Oil markets are calm as traders prepare for OPEC+ decision on production cuts. 
• OPEC+ will try to send a strong signal to markets. 
• A successful test of the resistance at $86.20 will push WTI oil towards the 50 EMA at $88.40.

OPEC+ Decision Is The Only Catalyst That Matters Today

WTI oil is mostly flat as traders wait for OPEC+ decision on production cuts. Yesterday, WTI oil received strong support amid reports indicating that OPEC+ may cut production by as much as 2 million bpd.

Some OPEC+ members cannot meet their quotas due to production problems, so the real cuts will be lower than the headline number in any scenario. However, the size of production cuts will send a strong signal to the market.

Most likely, Saudi Arabia will have to make significant cuts to provide material support to oil prices. Russia will also have to cut production. It should be noted that Russia will likely have to cut production in any scenario as G7 countries will soon introduce a price cap on Russian oil.

Previously, Russia said that it would not supply oil to countries that participate in the price cap scheme. Some production can be re-routed, but Russia’s exports will inevitably decrease if the country stops supplying oil to countries that introduce a price cap.

Traders should expect significant volatility after OPEC+ decision. In case production cuts exceed 1 million bpd, oil prices may get additional support. A production cut of 2 million bpd will likely lead to a strong rally.

WTI Oil Tests Resistance At $86.20

Currently, WTI oil is trying to settle above the resistance at $86.20. In case this attempt is successful, WTI oil will move towards the next resistance level at the 50 EMA at $88.40.

A move above the 50 EMA will open the way to the test of the resistance at $90.30. If WTI oil climbs above $90.30, it will move towards the resistance at $92.

On the support side, a move below $86.20 will push WTI oil towards the support level, which is located near the 20 EMA at $83.50. In case WTI oil declines below this level, it will head towards the support at $81.20. A move below $81.20 will push WTI oil towards the $78 level.

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