Oil prices soared for the fourth day in a row on Monday as traders pushed prices higher due to a trimmed demand outlook by the Organization of the Petroleum Exporting Countries (OPEC). OPEC announced a possible limit on production in its upcoming meeting, with reports of increased prices from Saudi Arabia and Russia committing to reducing production. Volatility is expected to rise with the International Energy Administration’s report on Wednesday, which is usually more dovish than the OPEC report.
The US Dollar Index is trading at a pivotal level after last week’s rough ride in markets, hovering around this level until the US Consumer Price Index (CPI) report for July is released on Wednesday. A pickup in inflation in the report could lead to a stronger US Dollar. At the moment, Crude Oil (WTI) is trading at $76.80 while Brent Crude is at $80.18.
OPEC recently lowered its projections for world demand growth in 2024, and US refiners are expected to reduce production, with some operating at only 90% capacity, the lowest level since 2020. Saudi Aramco has announced a decrease in supply for September compared to August. While tensions in the Middle East have lessened, they still pose a potential risk for further price increases.
Oil prices are currently rallying, with traders buying the dip from last week. Expect this momentum to fade with pressure from profit-taking, possibly triggered by reports from OPEC and the IEA. The 200-day Simple Moving Average may act as a turning point for prices. Support levels are at $75.27, $77.69, $78.55, and $79.84, with a possible fall to $72.00 and lower if new lows are reached.
WTI Oil is a type of Crude Oil sold on international markets, known for being high quality and easily refined. Supply and demand, global growth, political instability, OPEC decisions, and the value of the US Dollar all impact WTI Oil prices. Weekly inventory reports from the API and EIA also influence prices. OPEC’s production decisions, which impact supply, can lead to price fluctuations. OPEC+ includes non-member countries like Russia, whose decisions also affect prices.
