WTI takes a dive despite Israel-Gaza tensions, as Saudi Arabia vows market stability
- WTI crude drops to $85.97, despite earlier surge amidst Israel-Hamas conflict concerns.
- Saudi Arabia’s commitment to market stability and potential intervention tempers price spikes.
- Global inflation data and production choices from Russia and the US add layers to price influences.
West Texas Intermediate (WTI), the US crude Oil benchmark, tumbled more than 1.80% on Wednesday, as Saudi Arabia pledged to stabilize the market amid fears the conflict in the Middle East would disrupt supplies. Therefore, WTI is trading at $85.97, after hitting a daily high of $88.20 per barrel.
Oil prices navigate through geopolitical worries
Oil prices surged on Monday amid concerns that the fight of Israel and Hamas could escalate, dampening global supplies.
Nevertheless, Saudi Arabia stepped in and said It was working with regional and international partners to prevent an escalation, reaffirming their commitment to stabilize the markets. Sources cited by Reuters speculated that WTI would rise to $100 if the conflict escalates.
In the meantime, news that inflation is cooling in Germany suggests the European Central Bank (ECB) would not raise rates again, expecting its economy to contract by 0.4%.
Contrarily, Russia stick to its 300K crude Oil output cut, said the Russian President Vladimir Putin.
Data-wise, the US economic calendar featured the Producer Price Index (PPI) for September, with data slightly higher than expected, suggesting another rate hike looms, but Thursday’s data on the consumer side, could refrain policymakers to increase rates.
WTI Price Analysis: Technical outlook
After rallying sharply toward a multi-month high of $95.91 per barrel, WTI has retraced somewhat below the 20 and 50-day moving averages (DMAs), each at $90.86 and $88.31, respectively, implying that crude is on a pullback. This is because the US crude Oil benchmark remains above the 200-DMA and the latest cycle low, each at around $81.99 and $81.65, respectively. An extension below would expose the $80.00 per barrel. Conversely, if WTI reclaims the 50-DMA at $88.31, that could reveal the $90.00 figure.