WTI Crude oil surges on supply worries

On Friday, Russia announced it might cut oil output early in January. The US markets are due to close earlier on Friday amid the Christmas holidays.

The American WTI crude price retreated modestly after reaching a fresh monthly high. Crude oil prices are up on Friday, with the West Texas Intermediate (WTI) barrel nearing $80.00.

Oil surges despite the soft tone of equities and US dollar’s strength, helped by news coming from Russia, as Deputy PM Alexander Novak said that, due to the price cap, gas flows might be diverted from the EU to Asia.

Novak also noted that Russia may cut oil output by 5%-7% in early 2023 as a response to price caps on crude and refined derivatives. The cuts could reach 500,000-700,000 barrels per day (bpd).

Anatoly Antonov, the Russian ambassador to the US, said that Washington is carrying out a “proxy war” against Moscow, adding that the hazard of a clash between Russia and the US is high. It is worth adding that US markets are due to close early this Friday ahead of the Christmas celebration, meaning volatility will likely remain limited throughout the rest of the day.

WTI touched $80.00 before shedding some cents but is biased higher according to technical readings in the daily chart. It is trading at its highest since December 5, recovering from a multi-month low of $70.08. December’s monthly high was $83.33, a potential bullish target for next week. Should the black gold break beyond it, a rally towards $85.00 is on the table. Near-term dips will likely meet buyers at around $78.70, with the next support level at $78.15.