The price of crude oil rose due to supply constraints in several key markets. Where to look for WTI?

Crude Oil, US Dollar, WTI, Brent, Fed, OPEC+, Libya, Congo, UAE, Oman, Kazakhstan, Iran – Talking Points

  • crude oil prices pushed higher with swirling supply issues
  • Many oil-producing countries face challenges or support production cuts
  • A stronger US dollar could not contain oil. Will the WTI take back the heights?

Crude oil rallied early this week as supply issues continue to raise concerns about energy reserves destined for the fall in the Northern Hemisphere.

This is despite a significantly stronger US dollar following last week’s Federal Reserve meeting which pointed to higher rates for longer than the market had previously expected.

Last week, Saudi Arabia and OPEC+ appeared to set a floor on the price of oil. Saudi Energy Minister Prince Abdulaziz bin Salman said production could be reduced if deemed necessary.

So, Organization of Petroleum Exporting Countries (OPEC)+) general secretary Haitham Al-Ghais cited spare capacity as an ongoing problem for the oil market.

On Monday, unconfirmed reports emerged that the United Arab Emirates, Oman and Congo backed views expressed by Saudi Arabia last week that production could be cut if prices fall.

To compound the problem, political unrest in Libya has erupted again and the market is guessing that their production could be under threat. Then there are reports of problems with Kazakhstan port facilities impacting their oil exports.

Moreover, hopes for a quick resolution to the resurrection of the 2015 US-Iran nuclear deal have been dashed.

The maddening tension in oil prices is soaring alternative energy costs, especially for Europe, where Russia is pulling the strings of supply through the Nord Stream 1 gas pipeline.

The lack of oil from Russia has caused natural gas prices to skyrocket. The benchmark European natural gas futures contract Dutch Title Transfer Facility (TTF) fell back below 300 euros per megawatt hour (MWh) after peaking at just under 350Euro per MWh. A welcome reprieve but still well above the June low of 80 euros per MWh.

This was due to tthe European Union to get close to to encountering its gas storage filling 80% target goal two months ahead schedule, with reserves now at 79.4%.

The structure of the oil market could support further gains with a resumption of forwarding as volatility remains subdued.

WTI CRUDE OIL, OFFSET AND VOLATILITY (OVX)

Chart created in TradingView

— Written by Daniel McCarthy, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter

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