- The DXY broke highest levels since May 2017 and WTI extends to a 4% decline.
- Russia’s oil output cuts in August will be slightly below those agreed.
West Texas Intermediate oil prices have taken a knock, coincidently into month-end and as the US Dollar perks up nicely through the to test the 99 handle for the highest level printed at 99.02 since May 2017.
Output cuts not to be taken for granted
WTI spot prices are currently trading at $54.94 having travelled from a high of $56.70 to a low of $54.57. On strictly oil-related news, oil output cuts were thrown into question when Reuters reported that Russian Energy Minister Alexander Novak said Russia’s oil output cuts in August will be slightly below those agreed to under the deal between OPEC and non-OPEC producers. When the only major supportive factor for oil is put into doubt, your going to see lower prices which came into fruition today – a 4% drop was marked up since yesterday’s highs towards the 57 handle. As for futures, October West Texas Intermediate oil lost $1.61, or 2.8%, to settle at $55.10 a barrel on the New York Mercantile Exchange.
Prices firmly in whipsaw territory
However, analysts at TD Securities argued that the supply-side fundamentals remain positive for the energy market, with the latest DOE data pointing to tighter supply which had seen CTAs turn buyers across WTI, Brent, gasoline and heating oil. However, they also noted that buying remains on thin ice. “Momentum signals across the complex are pointing to weak buying, with prices all firmly in whipsaw territory which could see the algos return to sellers again next week as prices remain range-bound for the most part.”
WTI levels
Bulls capitulated on Friday and the price action has left the 60 handle back in the rearview mirror. When trading below the 200-day moving average, the bears are back in control and the 52 handle and the 61.8% Fibo at 51.70 come into focus again.
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