Oil Prices Reach New Highs Amid Uncertainty: What's Driving the Market?
Oil (WTI) recently reached its yearly peak before experiencing a pullback, and here's what's driving the market's volatility:
Saudi Arabia's Energy Minister Under the Spotlight
The energy market is on edge as traders closely monitor any statements from Saudi Arabia's minister of energy and oil. These comments have the potential to exert significant influence on oil prices.
Surprises and Production Cuts
Earlier this month, the oil market witnessed a sharp surge in prices following unexpected announcements from Russia and Saudi Arabia. These announcements outlined plans to extend production cuts until year-end. The big question now is whether Saudi Arabia will take further action.
US Dollar in Holding Pattern
Meanwhile, the US Dollar is treading cautiously, with a relatively calm calendar leading up to Wednesday. That's when the US Federal Reserve (Fed) is set to make its rate decision. The expectation is for unchanged interest rates. Market attention will then turn to Fed Chair Jerome Powell's post-decision speech.
Current Oil Prices
As of now, Crude Oil (WTI) is trading at $90.93 per barrel, while Brent Oil stands at $94.62.
Oil Market Highlights
Here are some key developments in the oil market:
Russia is holding suprise drills to protect North Sea Route.
Sanctioned Iran oil funds are said to be transferred to Qatar.
Saudi Arabia crude exports fell by 0.792 million barrels per day in July.
Russian Oil could fall into grace as US diesel producers are falling short of supply.
Saudi Energy Minister Prince Abdulaziz bin Salman will address an industry conference later Monday.
Hedge funds boosted their price outlook on Brent and Crude to a 15-month high last week.
Diesel and gasoline prices at the pumps are rising quickly both in the US and Europe, fueling concerns over renewed energy inflation.
The supply deficit might grow even larger should demand start to pick up from China, as recent macroeconomic data suggests.
Kazakhstan raised its daily Oil and Gas condensate production by 10% on Sunday from Saturday to 250,400 tons, according to data from the country’s Energy Ministry.
Oil Technical Analysis
Oil prices find themselves in a delicate balance, where any supply disruption could trigger further upward movement in futures. Although the Relative Strength Index (RSI) signals deep overbought conditions, potential drawdowns in US stockpiles could fuel additional gains. However, a rapid ascent to $93.12 is not anticipated without a significant catalyst.
Upside Potential: Breaking the double top from October-November last year at $93.12 could pave the way for a move to $97.11, the high of August 2022.
Downside Risks: A pivotal level at $84.30 from August 10 holds significance. If breached, a substantial downturn could lead to Oil prices dropping to a key support near $78.00. Stay tuned for further developments in this dynamic market.
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