- WTI holds above $90.40 amid the optimism in oil demand outlook.
- Prolonged oil output cut by Saudi Arabia and Russia boost WTI price.
- The upbeat Chinese economic data lift the WTI prices as China is the world’s largest oil importer.
- Oil traders will monitor the Federal Reserve (Fed) Interest Rate Decision for fresh impetus.
Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around the $90.20 mark so far on Monday. WTI prices trade close to a 10-month high due to a tight oil supply by Saudi Arabia and the optimism from the upbeat Chinese economic data.
Supply worries have remained a driving factor for WTI prices and boost WTI prices in recent weeks. That said, Saudi Arabia and Russia, the world’s two largest oil exporters, announced that they would prolong oil output curbs until the end of 2023. Through the end of 2023, Saudi oil output will be closer to 1.3 million barrels per day. Additionally, the International Energy Agency (IEA) warned earlier this week that oil market deficits would worsen in the fourth quarter with the summer-announced oil production cuts by Saudi Arabia and Russia exacerbating the situation.
Furthermore, the additional stimulus measure and the upbeat economic data from China lift the WTI prices as China is the world’s largest oil importer. On Friday, the National Bureau of Statistics (NBS) showed that Chinese retail sales rose 4.6% year on year in August, beating market estimates of 2.5%. Meanwhile, industrial production in the United States grew to 4.5% in August from 3.7% in July, above market estimates of 3.9%. The stronger data add to signals that the nation’s economy’s contraction has peaked. This, in turn, benefits the gold price.
Moving on, oil traders will closely watch the Federal Reserve (Fed) Interest Rate Decision on Wednesday. The market expects the Federal Reserve (Fed) to maintain interest rates unchanged at its policy meeting on Wednesday while keeping one more rate hike on the table. Fed Chairman Jerome Powell will later hold a press conference with no major changes expected from the Fed. On Friday, the US preliminary S&P Global PMI data for September will be due. These events could significantly impact the USD-denominated WTI price. Oil traders will take cues from the data and find trading opportunities around the WTI prices.