The WTI crude is holding near Thursday’s highs in the $117 territory despite risk-off Wall Street flows; post-strong US jobs data.
Front-month WTI futures held near Thursday’s highs on Friday, despite US equity markets trading with a downside bias on Fed tightening fears following robust US labour market data. WTI retreated as low as $111 per barrel on Friday after OPEC+ confirmed that they will be increasing output quotas by a larger 648K barrel per day each month in July and August to address what they said was growing demand.
WTI bulls will likely eye a retest of earlier weekly highs in the $120 area as their next target. A break above this level next week would open the door to a run higher towards mid-March multi-year highs around $130 per barrel.
But WTI then saw a more than $6.0 intra-day rebound to the $117s, where WTI is still trading on Friday, as traders digested the details of OPEC+’s latest move. The quota hikes were spread evenly across producers, including Russia, rather than being allocated towards the nations who can actually increase output (like Saudi Arabia, the UAE and Iraq) and so analysts came to the conclusion that OPEC+ will not be able to live up to its pledged output hikes over the next few months.
In recent months, Russian output has been in sharp decline due to Western sanctions after its invasion of Ukraine in recent months, exacerbating a pre-existing OPEC+ output problem where smaller producers, mostly in Africa, were struggling to keep up with output quota hikes. In sum, the latest OPEC+ announcement has not deterred the crude oil bulls, who have also been bidding up prices as of late on expectations for rising demand in North America and Europe as the continents enter their peak summer driving season, and in China, where lockdowns are being eased as Covid-19 infections decline.
Tags China iraq lockdowns opec Saudi Arabia UAE WTI
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