WTI extends rally beyond $86.40, US ISM Services PMI eyed

• WTI gains momentum near the highest level since November.
• Saudi Arabia, Russia will extend oil production cuts for the rest of 2023.
• The fear of the Chinese economic slowdown exerts pressure on WTI prices.
• Oil traders will monitor the US ISM Services PMI.

Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around the $86.40 mark so far on Wednesday. WTI price trims gains after reaching $88.00 for the first time since November. The voluntary supply cut by Saudi Arabia and Russia are the main driver for the WTI’s rally.

WTI price hit a Year-To-Date (YTD) high after Saudi Arabia and Russia, the world’s major oil exporters stated that they will extend oil production cuts for the rest of 2023. The actions boosted WTI prices, which have been rising in recent weeks. That said, the cut will bring Saudi crude output closer to 9 million barrels per day in October, November, and December, and will be reviewed monthly.

Meanwhile, Russia's Deputy Prime Minister Alexander Novak said on Tuesday that the nation would reduce its exports by 300,000 barrels per day through the end of 2023.

On the other hand, the weaker-than-expect Chinese data on Tuesday attracted some sellers. China's services activity in August grew at the slowest pace in eight months. Caixin reported on Tuesday that the Chinese Services Purchasing Managers' Index (PMI) fell to 51.8 in August from 54.1 in July. The concerns about the economic slowdown in China might limit the WTI's upside potential as China is the world's largest oil importer.

Looking ahead, oil traders await the US ISM Services PMI due later on Wednesday. Also, traders will take cues from the EIA Crude Oil Stocks Change data for the week ending September 1 due on Wednesday. These events could significantly impact the USD-denominated WTI price. Oil traders will take cues from the data and find trading opportunities around the WTI price.