WTI remains bid in US session on OPEC production cut sentiment

• WTI is amid a dichotomy between demand and supply signals.
• Bulls target 60.65 comes as the key target.
• To the downside, the 23.6% level at 53 the figure is critical.  

In an improved risk environment, coupled with Saudi Arabia’s new energy minister signalling a continued commitment to production curbs, the price of a barrel of oil has shot up, with WTI rallying towards the $58 handle from a low of $50.51 having taken out the 23rd May lows and August highs/resistance. Currently, WTI is 2.31% higher having ranged between a low of $56.56 and a high of $58.14.

However, amid a dichotomy between demand and supply signals, crude oil markets are set to remain range-bound, analysts at TD Securities argued.  

“OPEC remains committed to doing the heavy lifting necessary to balance markets, Venezuelan exports are at a sixteen year low and a conflict continues to place a cloud over Libyan production. In contrast, global demand angst continues to be the story with global PMIs continuing to slump and weak demand in Asia ex-China.”

Prince Abdulaziz bin Salma confirms commitment to production cuts

As for futures, West Texas Intermediate crude for October delivery climbed 93 cents, or 1.7%, to $57.45 a barrel on the New York Mercantile Exchange after Saudi Arabia’s new energy minister, (Prince Abdulaziz bin Salman was appointed as energy minister, replacing Khalid al-Falih), signalled a continued commitment to production curbs. Reuters reported that Prince Abdulaziz said the framework of Saudi policy wouldn’t change and that OPEC+, will continue the commitment to curb production by 1.2 million barrels a day.  

WTI levels

The price has firmed its bullish case  above the 200-daily moving average marches on beyond the trendline resistance, extending higher  above the 50% retracement of the July swing lows and highs. Bulls now have the 58 handle locked on  and the 78.6% Fibonacci retracement of July wing highs at 58.66 ahad of the 60 handle – 60.65 comes as the key target. To the downside, the 23.6% level at 53 the figure is critical.