Chat with us, powered by LiveChat

Choose country & language:

Close Icon

Oil prices at a 3-week high after OPEC output cut

Home >  Daily Market Digest >  Oil prices at a 3-week high after OPEC output cut

detail_image_market
author_img

Written by:
Myrsini Giannouli

07 October 2022
Share the article

Oil prices rose to three-week highs on Thursday, as markets digested the news of OPEC’s output cuts on Wednesday. WTI price climbed above the $86.9 per barrel resistance, reaching the $89.0 per barrel level. If the WTI price declines, it may encounter support near $82.1 per barrel, while resistance can be found at the $90.5 per barrel level. 

OPEC+ met on Wednesday to discuss production levels amid a global energy crisis. The cartel decided on a massive output cut of 2 million BPD starting in November. OPEC performed the largest reduction since 2020 in a bid to raise prices, led by Saudi Arabia and Russia. Despite mounting global recession risks, OPEC+ members strive to defend the $100 per barrel key level. Oil prices have been rising since OPEC’s unexpected decision, and many analysts predict that oil prices will climb back above $100 per barrel before the end of the year. 

The US and the EU have been striving to convince the Saudis to increase oil output, provide some relief to the energy crisis, and deprive Russia of its huge earnings from oil exports. OPEC however seems to have turned its back on the West. The White House released a statement following OPEC’s decision, indicating disappointment in the “shortsighted decision… to cut production quotas while the global economy is dealing with the continued negative impact of Putin’s invasion of Ukraine.” 

OPEC is determined to keep oil prices high, which have declined by as much as 25% since June. The slowing global economy and recession fears are undercutting oil demand and pushing oil prices down. High oil prices may push fragile economies into recession even faster though, creating a vicious cycle. In addition, oil prices are driven down by the shift of most major Central Banks towards a tighter monetary policy. Aggressive rate hikes stifle economic activity, fuelling recession fears and pushing oil prices down. 

Oil prices are also supported by fears of further escalation in the Ukraine crisis. Russian President Vladimir Putin has renewed threats to halt all energy exports after western allies agreed to impose a cap on Russian oil prices. In addition, the energy crisis in Europe intensifies, as there were leaks in three major Russian gas pipelines, raising suspicions of sabotage. The cap on Russian oil prices is to be enforced soon and will provide further support to oil prices. 

Oil demand is on the rise, as China, the world’s largest energy importer, is ending lockdowns. The start of the winter season will also signal a rise in oil demand boosting oil prices. 

WTI 1hr chart

TRADE WTI

The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. TopFX does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of TopFX, no reproduction or redistribution of the information provided herein is permitted.

author_img

Written by:
Myrsini Giannouli

Share the article:

Latest news

main_image_market

US economic growth boosts Dollar

Myrsini Giannouli 29 March 2024
main_image_market

Gold prices rise to a fresh all-time high

Myrsini Giannouli 29 March 2024

Oil prices gain strength on supply concerns

Myrsini Giannouli 29 March 2024

Bitcoin breaks through $70,000 barrier

Myrsini Giannouli 29 March 2024
Why TopFX
10-years
13+ years

industry presence
as a Liquidity Provider

Spreads
Spreads
from 0.0 pips

and reliable execution

Segregated
Segregated

client funds

First-class
First-class

customer support

Open your Live Account in 3 Steps
Step 1

Fill in the registration
form and click
"Create account".

Step 2

Once you are in the client secure area, please proceed with uploading your Proof of Identity and Proof of Residence.

Step 3

When your live account is approved, you can deposit funds and start trading on your chosen platform!

IMPORTANT

The website you are now viewing is operated by TopFX Global Ltd, an entity which is regulated by the Financial Services Authority (FSA) of Seychelles with a Securities Dealer License No SD037 that is not established in the European Union or regulated by an EU National Competent Authority.

If you wish to proceed please confirm that you understand and accept the risks associated with trading with a non-EU entity (as these risks are described in the Own Initiative Acknowledgment Form and that your decision will be at your own exclusive initiative and that no solicitation has been made by TopFX Global Ltd or any other entity within the Group.

Don't show this message again

Cookies on TopFX

The TopFX website uses cookies to optimise user experience.

These cookies fall under the following categories: essential, functional and marketing cookies. Marketing cookies may also include third-party cookies.

Manage Preferences

You can customize your selection of which cookies you want to accept.

  • Essential

    These cookies are necessary for the website to function correctly and cannot be switched off.

  • Functional

    Functional cookies allow the website to remember users' preferences and the choices you make on the website such as username, region, and language.

  • Marketing

    These cookies are used to track visitors across our websites and show you more relevant ads. Marketing cookies also include third-party cookies from partners. For more information relating to data protection & collection please view our Privacy Policy and Cookie Disclosure.