⏫⏫WTI gains 1.4%!

WTI is testing $83 per barrel area amid expectations of further supply cuts

WTI (OIL.WTI) is trading higher even in spite of today's strengthening of the US dollar. Key factor pushing crude prices higher are concerns over the possibility of OPEC+ countries extending or even deepening supply cuts. Saudi Arabia has earlier hinted that it will likely extend the 1 million barrel production cut through October and it is now said that Russia may also decide to extend its 0.5 million barrel export cut through October.

Apart from announced cuts by OPEC+ countries, oil production in the Gulf of Mexico may be also limited amid the ongoing hurricane season. Gulf production stands at around 2 million barrels per day. Gulf of Mexico is also home to many natural gas drilling rigs, so NATGAS prices may also be impacted.

While demand in China this year and the next year remains a huge uncertainty, Barclays thinks that OPEC+ supply cuts are more important than slightly demand issues. Barclays expects Brent price to climb to $97 per barrel next year.

Let us recall that the official US report released yesterday showed a 10.5 million drop in crude inventories. Oil and oil-derivative inventories are currently lower than the 5-year low.

Source: xStation5