Oil pops 1% with tailwinds from Iraq's production cuts and upbeat US GDP release

Oil broadly consolidates after dipping 3.60% in two days on profit-taking.
Iraq's Oil Minister confirms lower export number for Crude in July.
The US Dollar Index trades back below 101.00 after rebounding on the back of Nvidia earnings missing estimates.

Oil prices are ticking up this Thursday with headlines coming in out of Iraq while US Gross Domestic Product data came in strong. Iraq's oil Ministry confirmed that the country has exported roughly 3.485 million barrels per day of Crude over July. That number falls in line with the proposed 3.3 million barrels per day Iraq committed to in March after it earlier breached its production output quota within the OPEC agreement.

The US Dollar Index (DXY), which tracks the performance of the US Dollar against a bucket of currencies, is sliding back below 101.00. The DXY saw inflows on Wednesday after Nvidia earnings missed estimates. With two days ahead of very important economic data points, the US Dollar Index could make some substantial moves by Friday’s close.

At the time of writing, Crude Oil (WTI) trades at $74.65 and Brent Crude at $78.00

Oil news and market movers: Moving parts

News from OPEC member Iraq with Bloomberg reporting the country exported 108 million barrels in July, close to the proposed quota communicated in March in order to still meet the production cut request from OPEC.
Ukraine’s military claims it has striked strategic oil and artillery depots in the Rostov Kirov and Voronezh regions, Reuters reports.
Bloomberg reports that OPEC might rethink its cut-unwinding plans for Q4 in case a lack of growth in Oil demand takes place. OPEC will want to avoid a slump in prices at any cost.
The US Energy Information Administration (EIA) reported a far lower drawdown than expected in its weekly report on Wednesday. The actual number came in at a decline of 846,000, way less than the 3 million drawdown expected. The previous release was a drawdown of 4.649 million barrels.
Reuters reports that the Pentagon has released information on the Greek vessel in the Red Sea that was attacked last week, and might be losing oil. Still, it looks like an environmental disaster can be avoided, according to sources.

Oil Technical Analysis: Pressure is on for September's OPEC meeting

Oil is trying to halt the profit taking that has occurred in the past two trading days. From a pure technical point of view, the risk is tilted to more downside. Seeing that the brief rally was unable to break any technical upside levels and even reversed ahead of them means that traders were in it for the short term move and will step out as quickly as they can, limiting the lifespan of this rally.

On the upside, the double level at $77.65 aligns with both a descending trendline and the 200-day Simple Moving Average (SMA). In case bulls are able to break above it, the 100-day SMA at $78.45 could trigger a rejection.

On the downside, the low from August 5 at $71.17 emerges as the first support. Under $70.00, the $68.00 big figure is the first level to watch followed by $67.11, which is the lowest point from the triple bottom seen back in June 2023.

US WTI Crude Oil: Daily Chart

WTI Oil FAQs

What is WTI Oil?

WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.

What factors drive the price of WTI Oil?

Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.

How does inventory data impact the price of WTI Oil

The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.

How does OPEC influence the price of WTI Oil?

OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.

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