WTI takes clues from the recent oil macros suggesting a supply crunch as it snaps a three-day losing streak with mild gains near $86.20 heading into Thursday’s European session.
Saudi Arabia rejects the latest US-led criticism of the Organization of the Petroleum Exporting Countries and allies including Russia, known collectively as OPEC+, supply cut agreement. The Saudi Arabian Foreign Ministry recently stated that the OPEC+ decision was unanimous, took into account the balance of supply and demand and aims at curbing market volatility.
Elsewhere, Bloomberg stated that US officials are concerned that Russia's oil cap will fail as a result of the OPEC+ cut. Earlier, US Treasury Secretary Janet Yellen said that “Russia could profitably sell oil at historical prices in the $60 / barrel range.”
It should be noted that a leak in Russia’s Druzhba gas pipeline to Germany and Russian President Vladimir Putin’s blames on the Eurozone for the gas shortage adds strength to the oil prices. On the same line were Chinese media chatters suggesting the government’s plan to buy houses as a part of the stimulus, which in turn might tame recession fears in the world’s largest commodity user.
However, China’s softer oil demand for this winter and the US Energy Department’s concerns that the oil demand and production are expected to grow more slowly than previously forecast for the remainder of this year and in 2023, per Reuters, seemed to have exerted downside pressure on the black gold.
Above all, fears of recession and the market’s cautious mood ahead of the US Consumer Price Index (CPI) for September appear to challenge oil prices despite the latest rebound.
Despite the latest weakness, the 21-DMA puts a floor under the WTI prices at around $84.10.
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