.jpg)
- Oil prices decline with profit taking after Monday’s rise.
- Traders are seeing more supply released into the markets by the Republic of Congo.
- The US Dollar Index is trading above 105.50, as European stocks sparked a risk-off mood in the market.
Oil prices face profit-taking after news from Bloomberg that the Republic of Congo is exporting crude oil at the highest pace in 17 months. Prices rose driven by increasing geopolitical tensions from Russia to Yemen, while supply issues are also escalating in the United States. As parts of Texas reopen after a tropical depression hit the oil-producing region, Pemex, one of the largest U.S. refiners, said it is limiting its volumes again. Last April, the company faced a fire that damaged facilities, and now another factory has been forced to limit production due to air quality issues in the area.
while, US dollar index (DXY), which tracks the performance of the US dollar against six major currencies, is in the lead after a slow start on Monday. The US dollar benefited from risk-off sentiment in the market on Tuesday, as Nvidia in the US and Airbus in Europe faced heavy losses, sending major indices lower.
At the time of writing, WTI was trading at US$81.26 and Brent at US$84.98.
Oil News and Market Movers: OPEC sees former members committing rogue acts
- Republic of Congo exports nearly 269,000 barrels per day, the highest daily volume in 17 months, Bloomberg reported. This could be a mark on the wall for other African countries that could have added to their daily export volumes after a few North African countries left OPEC+ after not agreeing to accept any production cuts.
- Pemex, one of the largest U.S. refiners, reduced production at two separate plants, Bloomberg reported:
- One refinery is still facing production difficulties due to a fire that occurred in April.
- A second refinery was forced to reduce its throughput due to air quality restrictions.
- Indian state-owned refiners are in talks with Russia to deliver Urals oil at a discounted price of $3 to $5 below current benchmark prices after Reliance Industries Ltd earlier struck a deal with Moscow, according to Reuters.
- The American Petroleum Institute (API) will release its weekly figures on Tuesday at 20:30 GMT. The agency announced the withdrawal of 2.265 million barrels last week.
Oil technical analysis: Congo sign on the wall
Oil prices are set to trend higher before starting to decline once OPEC+ fully opens the oil tap again. This rise will be especially felt in the United States, where demand is expected to rise as more citizens will fly or drive on vacation during the summer. Meanwhile, hurricane season began earlier than usual, as the first tropical depression took its toll on the Texas area.
On the upside, the red bearish trend line near $81.00 was broken and now needs to prove its resilience as support with daily and weekly closes above it, allowing no further false breakouts. There is more room to move up towards $87.12, the highest level since the beginning of the year (April 5). Previously, the relatively small pivot level served as resistance near the $84.00 level.
On the downside, the large belt of the simple moving averages (SMA) should now act as support and no longer allow for movements below it to be seen. This means that the 55-day SMA at $79.63, the 100-day SMA at $79.64, and the 200-day SMA at $78.90 should avoid any declines below 79.00. USD. If these levels do not hold, another drop to $75 is possible.
US West Texas Intermediate crude oil: daily chart
Frequently asked questions about West Texas Intermediate crude oil
West Texas Intermediate oil is a type of crude oil that is sold in international markets. WTI stands for WTI, and is one of three main types including Brent and Dubai crude. WTI is also referred to as “light” and “sweet” due to its relatively low gravity and sulfur content, respectively. It is considered a high quality oil and easy to refine. It is sourced from the United States and distributed through the Cushing Hub, considered the “pipeline crossroads of the world.” It is a benchmark for the oil market and the price of WTI is frequently quoted in the media.
Like all assets, supply and demand are the main drivers of the price of WTI. 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 affect prices. Decisions by OPEC, a group of major oil-producing countries, are another major driver of the price. The value of the US dollar affects the price of WTI, as oil is mostly traded in US dollars, so a weak US dollar can make oil more affordable and vice versa.
Weekly oil inventory reports from the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence the price of WTI. Changes in inventories reflect fluctuations in supply and demand. If data shows a decline in inventories, this could indicate increased demand, leading to higher oil prices. High inventories can reflect increased supply, causing prices to fall. The API report is published every Tuesday and the EIA report the next day. Their results are usually similar, falling within 1% of each other 75% of the time. EIA data is more reliable, because it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 oil-producing countries that collectively decides production quotas for member countries at meetings held twice a year. Their decisions often affect WTI prices. When OPEC decides to cut its quotas, it can tighten supply, causing oil prices to rise. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten additional non-OPEC members, most notably Russia.
