WTI Oil Retreats Towards $77 As Traders Focus On Russian Oil Price Cap Rumors

Key Insights

• WTI oil gained strong downside momentum as traders reacted to the latest rumors about the Russian oil price cap. 
• Natural gas rallied as traders continued to prepare for the potential rail strike. 
• Gold rebounded as U.S. dollar declined against a broad basket of currencies. 

WTI Oil Remains Under Strong Pressure After EIA Report

WTI oil remains under strong pressure after the release of the EIA Weekly Petroleum Status Report. The report indicated that crude inventories declined by 3.7 million barrels from the previous week. Total motor gasoline inventories increased by 3.1 million barrels, while distillate fuel inventories grew by 1.7 million barrels. Domestic oil production remained unchanged at 12.1 million bpd.

According to recent reports, G7 wants to set the Russian oil price cap at $65 – $70 per barrel. This is bearish for the oil market as such a price cap increases chances that all Russian oil will stay in the market. Traders are also worried that rising coronavirus cases in China will lead to slower economic growth and hurt demand for oil. China has already introduced additional curbs.

Oil markets have been extremely volatile in recent trading sessions. Technical levels are not important when the market is focused on the news. In the near term, traders should be prepared for fast moves, which will be driven by the news on the Russian oil price cap.

Natural Gas Rallies As The Potential Rail Strike May Boost Demand

Natural gas rallied towards the $7.50 level as traders focused on the potential rail strike.

The weather forecast is not favorable for high natural gas consumption, but the market is worried that the rail strike would boost demand for natural gas as utilities will be forced to switch from coal to natural gas.

In case natural gas settles above the $7.50 level, it will head towards the resistance level at $7.75.

Gold Rebounds As U.S. Dollar Declines

Gold moved back above the $1740 level as the U.S. dollar found itself under significant pressure against a broad basket of currencies.

Silver gained strong upside momentum and moved towards the $21.30 level. Platinum declined towards $1000, while palladium made an attempt to settle above $1900.

Copper Remains Stuck Near The $3.60 Level

Copper continues to trade near the $3.60 level as traders remain worried about potential lockdowns in China.

In case copper fails to settle above the $3.60 level, it will get to another test of the support at the 50 EMA at $3.57.

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