Oil prices skyrocketed on Wednesday on record-high U.S. crude exports, with WTI price touching $89 per barrel. If the WTI price declines, it may encounter support near $82.1 per barrel, while resistance can be found at the $89.7 per barrel level.
Oil prices on Wednesday were bolstered by record-high US exports of 5.1 million barrels a day and low US imports. On the other hand, US inventories exceeded expectations but failed to bring oil prices down. Crude oil inventories increased by 2.6 million barrels last week when a drop of 0.3M was expected. Plummeting dollar prices also contributed to the rise in oil prices.
The Biden administration announced the release more of barrels from the US Strategic Petroleum Reserves last week, checking the ascend of oil prices. Oil prices remain high ahead of the US midterm elections, causing a headache for the US government. US President Joe Biden announced a plan to sell 15 million barrels from the SPR representing the latest tranche of the 180-million-barrel program.
Aggressive rate hikes stifle economic activity, undercutting oil demand. Fed rhetoric remained hawkish last week, boosting the odds of a sharp rate hike at the Fed’s next monetary policy meeting in November. A 75-bps rate hike is expected in November and has already been largely priced in by markets. Sharp rate hikes and continuous fiscal tightening run the risk of tipping some of the world’s leading economies into recession though.
OPEC+ recently 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.
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