WTI crude closer to yearly highs on positive Chinese data, supply cuts

Due to Saudi Arabia and Russia’s agreement to reduce output by 1.3 million barrels through the end of the year, WTI crude oil is currently trading at $86.62. Oil prices are supported by China’s strong economic indicators and Japan’s probable end to negative interest rates.

As supply cuts from Saudi Arabia and Russia and a positive outlook for the Chinese economy balance out anticipated resistance from central banks, the US crude oil benchmark remains high.

The supply restrictions put in place by Saudi Arabia and Russia, who agreed to reduce output by 1.3 million barrens combined until the end of the year, will probably continue to support oil prices.

WTI prices may be impacted by upcoming US CPI statistics because they could indicate additional rate increases. As a result of supply reductions, the US crude oil benchmark has remained stable at recent highs, and recent data from China provided an optimistic picture of the world’s second-largest economy. After reaching a day high of $87.61, WTI is currently trading at $86.62.

Meanwhile, upbeat economic data from China from a deflationary scenario improved investors’ sentiment toward its economic recovery, a tailwind for global oil prices. That, alongside words from the Bank of Japan (BoJ) Governor Kazuo Ueda mentioning a possible end for negative interest rates, underpinned the US Dollar, which is downward pressured, changing hands below the 105.00 figure, as reported by the US Dollar Index (DXY).

Another factor that keeps the WTI price afloat is storms and floods in Eastern Lybia, which triggered the closure of four major oil export ports since Saturday.

A set of macroeconomic data could reduce oil demand in the interim as inflationary data from the US and data from a significant central bank may indicate that additional tightening is required. On Thursday, the European Central Bank (ECB) will make its monetary policy announcement. A day earlier, the US would release the Consumer Price Index (CPI), which, if it exceeds expectations, might depress the price of WTI due to anticipation for future rate increases by the US Federal Reserve.

In addition, data from the Organisation of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) are due this week. Last month, the former reduced its prognosis for the rise of global oil consumption to 1 million barrels per day by 2024, but OPEC left its forecast for that growth unchanged at 2.25 million barrels per day.