WTI Oil Rallies As OPEC+ Cuts Production By 2 Million Bpd

Key Insights

• OPEC+ decided to cut oil production by 2 million bpd. 
• Silver found itself under strong pressure as dollar moved away from recent lows. 
• Natural gas moved closer to the $7.00 level. 

WTI Oil Gains Ground, Supported By OPEC+ Production Cut And Bullish EIA Report

WTI oil moved towards the $88 level after OPEC+ agreed to cut production by 2 million bpd.

OPEC+ has also extended the duration of its cooperation agreement until the end of 2023. The Joint Ministerial Monitoring Committee will meet every two months as OPEC+ decided that monthly meetings were not needed anymore.

Russia’s Novak reiterated that Russia would not sell oil to countries that impose a price cap on Russian oil. He added that the introduction of the price cap would lead to a temporary reduction of Russian oil production, which is bullish for oil markets.

Today, traders also had a chance to take a look at the EIA Weekly Petroleum Status Report. The report indicated that crude inventories declined by 1.4 million barrels from the previous week. Analysts expected that crude inventories would grow by 2 million barrels.

Total motor gasoline inventories decreased by 4.7 million barrels, while distillate fuel inventories declined by 3.4 million barrels. Domestic oil production remained unchanged at 12 million bpd. The report provided additional support to oil markets.

From a big picture point of view, WTI oil needs to settle above the 50 EMA at $88.40 to continue its rebound. RSI remains in the moderate territory, so there is enough room to gain additional upside momentum. Additional sales of oil from the strategic petroleum reserve are the key risk for oil markets in the near term.

Natural Gas Tries To Settle Above $6.90

Natural gas rebounded towards $6.90 after an unsuccessful attempt to settle below the support at $6.75.

Tomorrow, traders will focus on the EIA Weekly Natural Gas Storage Report, which may show that working gas in storage increased by more than 100 Bcf from the previous week.

At this point, traders do not look worried about this report, and natural gas prices are moving higher.

Silver Retreats As Dollar Rallies

Dollar’s strong rally put significant pressure on precious metals today. Silver made an attempt to settle below the support at $20.00 before rebounding to $20.40.

Platinum declined towards $920, while palladium tested the $2200 level. Gold has also found itself under pressure and moved below the support at $1715.

Treasury yields rebound after the recent pullback, and precious metals have little chances to gain upside momentum today.

Copper Remains Stuck Near $3.50

Copper  made an attempt to settle above the $3.50 level but lost momentum and pulled back.

Interestingly, copper markets tried to move higher when the U.S. dollar gained ground against a broad basket of currencies, which may point to rising demand for copper.

However, recession risks will be the key factor for copper markets in the upcoming months, and it remains to be seen whether copper bulls will find enough catalysts to push copper prices into the $3.60 – $3.70 range.

For a look at all of today’s economic events, check out our economic calendar.