Fundamental analysis of WTI

WTI crude oil prices are moving sideways around a key support level at $70.00. Markets, paused as the Saudi energy ministry said it would extend a voluntary 1 million barrels per day cut in oil production for another month. At the same time, Russia announced it would cut oil exports by 500,000 barrels a day next month. In total, these cuts will amount to about 1.5% of global supply. The move is part of a broader effort by OPEC+ producers to cut supply, promised to keep oil prices in check.

 The decision to cut production is a strategic decision often used to stabilize oil prices. In this context, the goal seems to be to offset the impact of poor global economic performance. The Institute for Supply Management (ISM) recently announced that the purchasing managers' index (PMI) for the manufacturing sector declined for the eighth consecutive month. The latest reading is 46.0, well below market expectations. 

 Investors expect to see more information on the Fed's stance on interest rates in the minutes of the Federal Open Market Committee's (FOMC) upcoming meeting. JPMorgan analysts note that global industrial activity is declining and U.S. manufacturing activity is approaching levels resembling the early stages of a pandemic. Although a recession in the U.S. in the near future is unlikely, ANZ analysts note that slower economic growth could lead to weakening demand for commodities, which could affect the consumption of distillates. Thus, a bullish sentiment is expected in the oil market, with WTI supported at $70 a barrel thanks to supply cuts from Saudi Arabia and Russia. However, this sentiment may be offset by macroeconomic uncertainty and weak demand for black gold. Careful monitoring of supply changes and economic data is critical to deciphering the trajectory of crude oil prices over the near term.

Technical Analysis and Scenarios:

With the price currently trading near the middle Bollinger Band at $70.20 and the band pointing upward with a narrowing price range, there is a possibility of a bullish move.

Main scenario (BUY)

Recommended entry level: 71.00.

Take Profit: 72.40.

Stop loss: 69.75.

Alternative scenario (SELL)

Recommended entry level: 68.70.

Take-profit: 67.70.

Stop loss: 69.50.