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WTI Crude Oil Update: G7 Meet to Discuss Russian Oil Price Cap, WTI Rises


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CRUDE OIL (WTI) NEWS AND ANALYSIS

  • G7 nations meet today to advance an oil price cap on Russian oil
  • OPEC + supply cut rhetoric unable to counter bearish trend and fears of a global slowdown. Key technical levels considered
  • Extreme long sentiment provides contrarian case for continued selling.

Oil slides more than $1 as G7 debate Iran nuclear deal, Russia | Zee  Business

 

G7 NATIONS MEET TODAY TO DECIDE ON RUSSIAN OIL PRICE CAP

The industrial heavyweights that make up the G7 (Britain, Canada France, Germany, Italy, Japan and the U.S.) are to meet today to sure up plans on a price cap on Russian oil. Britain, being the global maritime insurance hub is eager to get a deal in place to lower the price of oil and reduce Russia’s oil revenue, making it more difficult to fund its “special operation” in Ukraine.

G7 nations are responsible for insuring around 90% of global shipping traffic, meaning that proposed restrictions on such insurance agreements being subjected to a maximum price per barrel of oil, could limit oil prices globally.

The potential price cap has received some criticism from those suggesting Russia can just divert its oil to nations that aren’t signatories to the cap, such as China and India. It has however been reported that China and India, while not part of the G7, would be in favor of cheaper oil prices.

WTI CRUDE OIL FUNDAMENTAL AND TECHNICAL ANALYSIS

According to the latest Energy Information Administration (EIA), crude oil stocks depleted faster than expected, seeing a drawdown of 3,326 million for the week ended August the 26th, compared to the expected draw of 1.483 million.

WTI Crude Oil Update: G7 Meet to Discuss Russian Oil Price Cap, WTI Rises

Oil prices have shown a long-term downtrend which will come as a much-needed relief to motorists with travel plans during the upcoming Labor Day weekend. Gasoline prices in the U.S. have been seen declining for 11 successive weeks after averaging around $5 a gallon earlier in the year.

WTI prices, while higher this morning, have neared the recent low of 85.75, now trading at 88.40. The downtrend is showing no significant risk to a long-term trend reversal which is helped by lower demand for fuel in the US compared to this time last year. Demand for fuel is 8.6 million barrels a day, down nearly 1 million bps from last year.

The mention of OPEC + cutting supply in response to oil market volatility did little to disrupt the long term trend. Support remains at 85.75 while resistance appears at88.40, 93 and 96.44.

WTI Crude Oil Daily Chart

WTI Crude Oil Update: G7 Meet to Discuss Russian Oil Price Cap, WTI Rises

Source: TradingView, prepared by Richard Snow

 

Sep 2, 2022 | DailyFX
Richard Snow, Analyst

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