WTI tumbles amid global economic jitters, surging US gasoline inventories
|- WTI experiences a sharp 1.50% drop, extending losses amidst global economic slowdown fears and hedge fund liquidations.
- OPEC+ maintains current production levels despite the WTI price slide, with no indication of extending cuts into 2024.
- US business activity decelerates, while the Eurozone economy faces potential contraction in the upcoming quarter, per HCOB PMIs.
West Texas Intermediate (WTI), the US crude oil benchmark, dropped almost 1.50% on Thursday, extending its losses to two straight days amid renewed fears of a global economic slowdown. Even though OPEC+ countries aim to keep a narrow supply, WTI price slides below $83.000 per barrel after hitting a daily high of $84.88.
Oil price slumps below $83, on traders booking profits, OPEC+ decision, economic concerns
On Wednesday, oil prices slid more than $5, according to sources cited by Reuters, due to “heavy hedge fund liquidation on fears that higher interest rates with inflation keep sapping fuel demand.” In the meantime, a sharp jump in gasoline inventories in the US warranting that demand was weak in the last week.
The Organization of Petroleum Exporting Countries and allies – also known as OPEC+, stick to its current oil production, which included recent output cuts of 1.3 million barrels by Saudi Arabia and Russia, extended into the end of 2023. The OPEC+ did not mention if those cuts would be prolonged until 2024.
Regarding the global economic outlook, business activity in the US slowed down, while the Eurozone (EU) economy would likely shrink in the last quarter, according to HCOB’s Services and Composite PMIs.
WTI Price Analysis: Technical outlook
Oil price is dropping below the latest cycle high before WTI reached a year-to-date (YTD) high of $94.99, at around $84.85. In doing so, the 50-day moving average (DMA) was surpassed, putting into play a test of the $80.00 figure. A breach of the latter would expose the 200-DMA at $77.47, which, once cleared, could open the door to test last year’s low of $70.10. Conversely, if oil prices jump above the 50-DMA at $85.03, the following resistance would be the $90.00 mark.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.