Why Is WTI Crude Oil Up Today? Trump Russia Deadline Keeps Oil Above $84

On July 31, WTI crude oil rose above $84 per barrel. Prices were affected by President Donald Trump’s new, shortened deadline for Russia as well as expectations for OPEC+ to approve new production increases over the coming weekend.

Prices were also affected by tighter crude inventories in the U.S. and disruptions to Middle East exports. Reuters reported that supply and demand was of little concern to the market, as supply disruptions in the Middle East remain a greater concern.

Due to a combination of disruptions and tightening inventories, oil prices continue to rise. Although OPEC+ plans to keep production up, disruptions in the Strait of Hormuz, increased demand on U.S. refineries, and potential U.S. sanctions on Russian exports have reduced limits on prices.

Supply disruptions have remained high due to President Trump’s shortened Russia and Ukraine ceasefire deadline. This has increased the probability of new Russian sanctions due to energy exports.

Reuters has stated that traders are concerned that increased sanctions would result in the distribution of Russian crude worldwide to cease completely, tightening markets as OPEC+ would continue to raise production. As one of the largest oil exporters, Russian disruptions would create fundamental imbalances worldwide.

Consolidation of the continued assaults in the Middle East leaves the movement of oil tankers through the Strait of Hormuz with the potential of being disrupted, as recent attacks have not allowed shipping to return to a status of normalcy. While the flow of oil exports has improved, the disruption has resulted in high shipping and insurance costs.

Predictions of Further OPEC+ Output Increases

The markets are preparing for this weekend’s OPEC+ meeting, where it is expected that once again the producer alliance will increase the production limit by 188,000 barrels per day from September.

As reported by Reuters, delegates have stated that while demand, and particularly the current geopolitical situations, are being taken into account, the group is still expecting increased production and reversing the voluntary production cuts that were implemented in 2023.

Due to the security situations in the Middle East, particularly with the export disruptions, the actual supply is lower than the production quotas stated, even considering the increased production.

Continued Low US Crude Inventories are Sustaining High Prices

Commercial crude inventories for the week ending July 24, 2023, as issued by the US Energy Information Administration, show a 7.2 million barrel decline and a total of 404.5 million barrels, which is approximately 6 to 7% below the five-year seasonal average.

The EIA also said Cushing, OK, the delivery point for WTI futures, has about 18.6 million barrels. This is about as low as Cushing has been operationally in recent years.

Refineries continued operating at a robust 97.2% utilization, processing about 17.3 million barrels per day. This is a good sign for seasonal fuel demand, especially with the current slower pace of growth for the global economy.

WTI Technical Analysis: Bulls Target $88.70 Reclaiming $84

Crude WTI developed bullish sentiment after successfully defending its rising trendline, the 100 period EMA, near $81.90, and an uptick to $84.10, now deemed support, as pricing remained above the 50 period EMA.

Recent sentiment and price action allow for a breakout to $85.50 with a target of $88.70 and the recent swing high at $93.60. With loss of support at $84.10, price action would target $81.90, $81.00 and $77.90.

Resistance: $85.50, $88.70, $93.60

Support: $84.10, $81.90, $81.00, $77.90

Trade Setup

Entry: Buy above $85.50

Targets: $88.70, then $93.60

Stop Loss: Below $84.10

As long as WTI remains above $84.10, the short-term uptrend remains intact. A decisive breakout above $85.50 is likely to create a subsequent bullish response in the market, targeting $88.70.

Frequently Asked Questions

What is causing the increase of WTI crude oil today?

Oil prices are rising, as the threat of supply interruptions have increased while President Trump has shortened Russia’s ceasefire order and tensions in the Middle East threaten supply as well. According to Reuters, these geopolitical pressures are negating higher OPEC+ output expectations.

Is OPEC+ increasing oil production?

It is widely anticipated in the markets that OPEC+ will approve an increase of about 188,000 barrels per day at its meeting this weekend, as part of the gradual supply restoration plan. According to Reuters, this has been suggested in talks with OPEC+ representatives.

What are the important levels and trends in WTI pricing?

Resistance levels are present at $85.50, $88.70 and $93.60, while support levels sit at $84.10, $81.90 and $81.00.