WTI Oil Tests The $80 Level As Russia Plans To Cut Production

Key Insights

• Russia may cut oil production by 5% – 7% to respond to the Russian oil price cap imposed by Western countries.
• Natural gas rebounds as current demand is high due to cold weather. 
• Gold moves higher despite rising Treasury yields. 

WTI Oil Gains Ground Amid Supply Worries

WTI oil is currently trying to settle above the $80 level as traders react to the latest news from Russia.

Russia’s Deputy Prime Minister Novak said that Russia could cut output by 5% – 7% in early 2023 as a response to the Russian oil price cap scheme.

Russia is expected to issue a decree banning the sale of oil and oil products to countries that participate in the price cap scheme in the upcoming days.

In case WTI oil manages to settle above the $80 level, it will move towards the next resistance, which is located at the 50 EMA at $80.60. A successful test of this level will push WTI oil towards the resistance at $82.00.

On the support side, the nearest support level for WTI oil is located at $78.40. If WTI oil declines below $78.40, it will move towards the next support at the 20 EMA at $77.50.

Natural Gas Gains Ground As Traders Focus On Cold Weather

Natural gas made an attempt to settle below the $5.00 level but lost momentum and moved back towards $5.20.

Freeport LNG is not expected to get back to work until the second half of January, which is bearish for natural gas markets. However, natural gas markets receives some support from the Arctic Blast that brings low temperatures and leads to high natural gas consumption.

Gold Tests Resistance At $1800

Gold is currently trying to settle back above the $1800 level despite rising Treasury yields.

Other precious metals are also enjoying strong support today. Silver managed to settle above $23.50 and is testing the resistance level at $23.70. Platinum rebounded towards the $1030 level, while palladium moved towards the strong resistance level at $1725.

Copper Remains Range-Bound

Copper moved back above the $3.80 level amid a broad rebound in commodity markets. At this point, copper lacks strong catalysts so it is sensitive to the changes in general market sentiment.

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