Home Sports Oil prices soar after OPEC cuts – key WTI tests ahead

Oil prices soar after OPEC cuts – key WTI tests ahead

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WTI, OPEC+ – topics of discussion

  • OPEC+ agrees to cut oil production of 2 million barrels per day
  • WTI is building towards a key resistance line, the 50-day moving average
  • The White House is very disappointed with OPEC’s “connection with Russia”.

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Oil continues to rally at the end of the session in New York after the decision by OPEC+ to cut production by 2 million barrels per day starting in November. The output cuts come as OPEC+ ministers seek to revive oil markets that have slumped over the past few months. Fears of a global recession have lifted oil prices from a one-year high of $129 a barrel to current levels of around $87 a barrel, as tighter monetary policy appears to be holding back economic activity.

The morning announcement from Vienna came as an unpleasant surprise for Washington, as the White House works to increase oil supplies to lower domestic prices. In a statement released after the OPEC+ decision, the White House said it was disappointed by the “short-sighted decision … to cut production quotas while the global economy deals with the lingering negative impact of Putin’s invasion of Ukraine.”

WTI 1 hour chart

The chart is created using TradingView

WTI prices jumped following the OPEC decision this morning, following a strong rally on last week’s event. Concerns about global growth saw WTI trade to fresh annual lows below $76.50 before staging a recent rally. A strong breakout from these lows now indicates that WTI is challenging trendline resistance that has limited upside potential over the past 3 months. The 50-day moving average can also be found here at $88, which could provide additional resistance to this move up. A break above these key hurdles will worry many as higher energy costs could be just around the corner. Just as central banks seek to manage rampant inflation, we may see another spike in the energy component of global CPI calculations.

WTI Daily Chart

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The chart is created using TradingView

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— Posted by Brendan Fagan

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https://www.dailyfx.com/news/oil-price-soars-following-opec-production-cut-key-tests-ahead-for-wti-20221005.html

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