- WTI gains momentum near $87.00, the highest since November 2022.
- Saudi Arabia and Russia will extend oil supply cuts to 1.3 million bpd through the end of 2023.
- A higher for longer interest rate narrative in the US might limit the Loonie.
- Oil traders await Crude Oil Inventories data, US Consumer Price Index (CPI).
Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around the $87.00 mark so far on Tuesday. The extended crude output cuts by Saudi Arabia and Russia support WTI prices to the highest level since November 2022.
Saudi Arabia and Russia, the world’s major oil exporters stated that they will extend oil production cuts for the rest of 2023. The actions boosted WTI prices, which have been rising in recent weeks. That said, the cut will bring Saudi crude output closer to 1.3 million barrels per day through the end of 2023.
Furthermore, the easing fear of China deflation pressure lifts WTI price as China is the world’s largest oil importer. Chinese Consumer Price Index (CPI) for August rose 0.1% YoY, from a 0.3% drop in the previous month, compared to the 0.2% rise expected. The monthly figure was 0.3% as expected.
On the other hand, the upbeat US economic data last week lends support to the higher for longer interest rate narrative in the US. This, in turn, might limit the upside in WTI. It’s worth noting that higher interest rates raise borrowing costs, which can slow the economy and diminish oil demand.
Looking ahead, oil traders await the API Weekly Crude Oil Stock and EIA Crude Oil Stocks Change data for the week ending September 8 due on Wednesday. The attention will shift to the US Consumer Price Index (CPI) due on Wednesday. These events could significantly impact the USD-denominated WTI price. Oil traders will take cues from the data and find trading opportunities around the WTI prices.