WTI Oil Rallies As OPEC+ May Cut Production By More Than 1 Million Bpd

Key Insights

• WTI oil gained strong upside momentum as OPEC+ is ready to provide support to oil markets. 
• The slowdown of the world economy remains the key risk for oil markets. 
• WTI oil needs to settle above the 20 EMA to have a chance for a sustainable upside move. 

OPEC+ Is Ready For An Aggressive Production Cut

WTI oil is currently trying to settle above the $82 level as traders react to OPEC+ plans to cut oil production.

Recent reports indicated that OPEC+ may cut production by more than 1 million barrels per day (bpd) to stabilize oil markets after the lengthy pullback. According to the reports, OPEC+ cuts may include a voluntary production cut by Saudi Arabia, whose participation is extremely important for global oil markets.

Meanwhile, economic data points to the slowdown of the world economy. Today, Japan released the final reading of the Manufacturing PMI report, which indicated that Manufacturing PMI declined from 51.5 in August to 50.8 in September, compared to analyst consensus of 51.

In India, Manufacturing PMI decreased from 56.2 to 55.1. Traders will soon have a chance to take a look at Manufacturing PMI reports from the Euro Area, and they are expected to be ugly.

The key question is whether OPEC+ cuts will be sufficient enough to provide sustainable support to oil markets. Most likely, the global economy will face material problems in the remaining months of the year, which is bearish for oil.

WTI Oil Is Moving Towards The Key Resistance At The 20 EMA

WTI oil managed to settle above the resistance level at $81.20 and is moving towards the next resistance, which is located at the 20 EMA at $83.40. RSI is in the moderate territory, and there is plenty of room to gain upside momentum in case the right catalysts emerge.

In case WTI oil settles above the 20 EMA, it will head towards the resistance near the $86 level. A move above this level will push WTI oil towards the 50 EMA at $88.50.

On the support side, the previous resistance at $81.20 will serve as the first support level for WTI oil. If WTI oil declines below this level, it will move towards the next support at the $78 level. A successful test of the support at $78 will push WTI oil towards the support at $75.50.

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