Oil up 6th week on Saudi cuts gambit; Charts show overbought market
Investing.com | Author Barani Krishnan
Published Aug 04, 2023 01:37PM ET
Investing.com -- Play it to the hilt.
Like an encore demanded each time OPEC performs, the Saudi-cuts gambit rose to the occasion again this week, with the kingdom announcing ahead of the cartel's monthly meeting on Friday that it will drop another million barrels per day from its September production — akin to what it did in July and will repeat this month.
U.S. West Texas Intermediate, or WTI, crude settled up $1.27, or 1.6%, at $82.82 per barrel.
The session high for WTI was $83.23, a peak not seen since early April.
For the week, the U.S. crude benchmark rose 2.8%, adding to July’s gain of nearly 16%.
London-based Brent crude settled the U.S. trading session up $1.10, or 1.3%, at $86.24.
The intraday peak for Brent was $86.64 — the highest since mid-April.
For the week, the global oil benchmark gained almost 2%, after running up nearly 14% for July.
The Saudis announced their September production cut on Thursday through an anonymous official at the energy ministry in Riyadh. That left Friday’s OPEC+ meeting, held via a Zoom hook-up, uneventful.
To make it merrier for oil bulls, Russia chirped in on the Saudi announcement on Thursday, saying it would shed 300,000 barrels per day from its exports. But traders surveyed by Investing.com expressed little faith in the Russian pledge, given Moscow’s relatively low truth-score in almost everything.
While the momentum in WTI suggested it could ride till $86 before serious resistance emerged, the rally could reach exhaustion earlier, technical chartist Sunil Kumar Dixit said.
“WTI has the appearance of an overbought market although its 4-Hour Stochastics still have room for upside, with open targets for the 100-day SMA, or Simple Moving Average, of $85.45 and the monthly Middle Bollinger Band of $86.90,” said Dixit, who’s chief technical strategist at SKCharting,com.
While a previous correction towards $78.70 had rebooted WTI’s rally, “a settlement below the 5-day EMA, or Exponential Moving Average, of $81.45 will be an initial sign of exhaustion,” Dixit added.
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