WTI Oil Rebounds As Saudi Arabia Denies Report About Output Increase

Key Insights

• Saudi Arabia officially denied the recent report that it was discussing a production increase of 500,000 bpd. 
• Natural gas rallied as traders feared that a potential rail strike would block coal shipments and force utilities to boost natural gas consumption.
• Gold pulled back as dollar gained ground against a broad basket of currencies. 

WTI Oil Rebounds From Session Lows As Saudi Arabia ‘Categorically Denies’ Recent Report About Production Increase

WTI oil has suffered a strong sell-off as traders reacted to problems with coronavirus in China and Saudi Arabia’s potential plans to boost production at the next OPEC+ meeting.

However, Saudi Arabia stated that it did not have such plans. According to the Saudi Press Agency, “Saudi Energy Minister, Prince Abdulaziz bin Salman, categorically denies recent reports that Saudi Arabia is discussing with other OPEC producers an output increase of 500 thousand barrels per day.”

The report from the Saudi Press Agency provided significant support to oil markets, and WTI oil moved closer to the $80 level.

Natural Gas Rallies As Traders Focus On The Potential Rail Strike

Natural gas gained 7% and tested the resistance level at $6.75 as the largest rail union rejected labor deal. The risk of a national strike is rising, which means that coal shipments could be hurt, and utilities’s demand for natural gas could increase.

The weather forecast is favorable for high natural gas consumption, providing additional support to the market. In case natural gas manages to settle above $6.75, it will move towards the next resistance level at $6.90.

Gold Declines As Dollar Rallies

Gold  settled below the support at $1750 and made an attempt to get below the next support level at $1730 as traders focused on the strong U.S. dollar. Treasury yields moved lower today, but this move did not provide any support to precious metals.

Meanwhile, silver tested the 20 EMA at $20.65. Platinum made an attempt to settle below $975, while palladium pulled back towards the $1850 level. Problems with coronavirus in China served as an additional negative catalyst for precious metals markets.

Copper Tests Support At The 50 EMA

Copper settled below the $3.60 level and is testing the 50 EMA at $3.57 as traders abandon hopes about rising demand in China.

In case copper manages to settle below the 50 EMA, it will gain additional downside momentum and move towards the $3.50 level.

Traders should note that China is the world’s main consumer of copper, so the continuation of the strict COVID curbs in China would have a significant negative impact on copper markets.

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