WTI extends recovery above $90.00 as OPEC’s production cut hint accelerates supply worries

• Oil prices have scaled to near $91.00 on growing supply worries after OPEC signaled production cuts.
• PBOC’s dovish stance on PLR will improve the oil demand in China ahead.
• Fed chair Jerome Powell may discuss a slowdown in the pace of hiking interest rates at Jackson Hole.

West Texas Intermediate (WTI), futures on NYMEX, has extended its gains to near $91.00 after overstepping the psychological resistance of $90.00. The oil prices are eyeing a break above their immediate hurdle of $91.62 for a fresh bullish impulsive wave.

Investors have gung-ho over black gold as OPEC has signaled a cut in its total production to offset the recent drop in oil prices. No doubt, the oil cartel has ways and means to tackle the oil-related challenges. Therefore, to push oil prices relatively higher, OPEC will scale down the production as required. It is worth noting that the oil prices fell around 33% from their yearly high of $127.00, recorded in March.

On the demand front, declining PMI numbers from Japan and Australia are indicating an economic slowdown in the Asia-Pacific region. The economic data has remained downbeat. This indicates that the oil demand has remained subdued earlier. Time ahead, the demand for oil in China is expected to rise as the People’s Bank of China (PBOC) has come forward with a dovish stance on the Prime Lending Rate (PLR). The central bank has trimmed the one-year and five-year PLR by 5 and 15 basis points (bps) respectively.

This week, the Jackson Hole Economic Symposium will be of utmost importance. Considering the evidence of exhaustion in the price pressures and accelerating consequences of hiking interest rates vigorously by the Federal Reserve (Fed), Fed chair Jerome Powell will discuss a slowdown in the pace of hiking interest rates looks likely.