WTI sellers attack $87.00 as US President Biden challenges OPEC+ verdict
- WTI remains pressured near weekly low as firmer DXY joins hopes of easing supply crunch.
- US President Joe Biden vows consequences for Saudi Arabia after OPEC+ decision to cut oil supplies.
- Firmer yields, fears of recession and hawkish Fed bets add strength to the DXY.
- Risk catalysts, API Weekly Crude Oil Stock eyed for clear directions amid bearish bias.
WTI holds lower ground near the $87.00 support confluence as US President Biden conveys his disappointment with the Organization of the Petroleum Exporting Countries and allies including Russia, known collectively as OPEC+, decision. Even so, the bears remain cautious at the weekly low during Wednesday’s Asian session.
Reuters mentioned that US President Joe Biden pledged on Tuesday that "there will be consequences" for US relations with Saudi Arabia after OPEC+ announced last week that it would cut oil production over US objections. The news also mentioned that Biden’s announcement came a day after powerful Democratic Senator Bob Menendez, chairman of the Senate Foreign Relations Committee, said the United States must immediately freeze all cooperation with Saudi Arabia, including arms sales. It’s worth noting that OPEC+ surprised markets by announcing a two million barrel-a-day output cut during the last week.
Other than the hopes of a delay in the supply cuts, already agreed by OPEC+, the risk-aversion wave and the firmer US Dollar Index (DXY) also weigh on the commodity prices.
That said, the DXY renews a fortnight top near 113.50 as firmer US Treasury yields join the hawkish Fed bets to keep greenback buyers hopeful ahead of today’s Federal Open Market Committee (FOMC) Meeting Minutes.
Also exerting downside pressure on black gold prices could be the International Monetary Fund’s (IMF) latest economic projections. On Tuesday, the IMF lowered the global economic growth forecast for 2023 to 2.7% from 2.9% estimated in July while citing pressures from high energy and food cost, rate hikes as the key catalysts for the move. It’s worth noting that the Washington-based institute left the 2022 growth forecast unchanged at 3.2% versus 6.0% global growth in 2021."
To sum up, the risk-off mood joins hopes of easing the supply crunch to weigh on the black gold prices ahead of the private weekly inventory data from the American Petroleum Institute (API), prior -1.77M.
Technical analysis
50-DMA and a two-week-old ascending support line highlight $87.00 as the short-term key support.