Oil continued to decline on Thursday, with WTI price dropping below $107 per barrel, close to its monthly low. If the WTI price retreats, support can be found further down near $103 per barrel, while resistance can be found near the $121.2 per barrel level and higher up at $130 per barrel.
OPEC and OPEC+ held their 2-day meeting on Wednesday and Thursday. The joint organization discussed its output goals for August but refrained from setting a goal for September’s production. OPEC+ resisted pleas, especially from the US Government, to ramp up oil production, and kept its production goals for August to the same levels set in its previous meeting. The organization’s members agreed to raise their output goal by approximately 648,000 barrels a day. It remains to be seen, however, whether the bans on Russian oil will allow the organization to reach its output quotas. Many OPEC members continue to underperform, raising doubts about whether the organization can maintain its output goal, and adding to supply concerns.
Concerns that interest rate hikes could slow global economic growth reducing energy demand have pushed oil prices down in the past couple of weeks. An increasing number of major Central Banks are moving towards a tighter fiscal policy to tame soaring inflation rates. Stalling economic growth, combined with fiscal tightening gives rise to fears of recession, halting the ascend of oil prices.
Oil demand outlook has increased though, as the zero-Covid lockdown in Shanghai has ended, increasing demand outlook and boosting oil price. It seems however that Covid restrictions are not over in China, creating uncertainty in oil demand. China is the largest importer of crude oil and Covid lockdowns have dampened oil demand, pushing prices down.
Geopolitical tensions also support oil prices, as tight supply raises fears of an energy crisis, especially in the EU. The latest package of EU sanctions against Russia includes a ban on Russian oil imports that will effectively reduce EU oil imports from Russia by 90% by the end of the year and end the EU’s dependency on Russian oil. G7 leaders decided on Tuesday to take further action against Russia, by imposing “severe and immediate economic costs” on Russia. Further sanctions on Russian oil exports are expected, possibly by enforcing a price cap on Russian oil exports, although details have yet to be decided.
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.
Fill in the registration
form and click
Once you are in the client secure area, please proceed with uploading your Proof of Identity and Proof of Residence.
When your live account is approved, you can deposit funds and start trading on your chosen platform!
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
These cookies fall under the following categories: essential, functional and marketing cookies. Marketing cookies may also include third-party cookies.
You can customize your selection of which cookies you want to accept.
These cookies are necessary for the website to function correctly and cannot be switched off.
Functional cookies allow the website to remember users' preferences and the choices you make on the website such as username, region, and language.