WTI looks to approach $87.00 level, focus on EIA Crude Oil data

• WTI prices trade lower ahead of the EIA Crude Oil stockpiles report.
• API US crude oil inventories declined notably higher than expectations.
• Saudi Arabia's crude output will be closer to 9 million (bpd) through the year 2023.
• China’s gloomy economic situation could limit the upside potential of black gold.

Western Texas Intermediate (WTI), the US crude oil benchmark, snaps a two-day winning streak. Spot price trades lower around $87.20 during the early trading hours in the European session on Thursday. The Crude oil prices experienced upward support due to further decline in US crude oil stock and the supply cut by OPEC+.

Data from the American Petroleum Institute (API) indicates that US crude oil inventories declined by 5.521 million barrels, notably higher than the expectations of a 1.429M decline. The previous week's decline was 11.486 million barrels.

In addition, Saudi Arabia and Russia, two of the world's largest oil-exporting countries, have announced their intention to extend oil production cuts for the entirety of 2023. These measures have bolstered the prices of black gold. It's important to note that this production cut will bring Saudi Arabia's crude output closer to 9 million barrels per day (bpd) for the upcoming months through the year 2023, and it will undergo monthly reviews.

Russia's Deputy Prime Minister, Alexander Novak, has also disclosed that Russia plans to reduce its oil exports by 300,000 barrels per day throughout the remainder of 2023.

Investor confidence continues to be restrained due to ongoing concerns about the worsening economic situation in China and the persistent trade tensions between China and the United States (US) following US Commerce Secretary Gina Raimondo’s statement of anticipating no revisions to the US tariffs.

These risks related to China's economic condition and trade dynamics could limit the potential upside for oil prices, as China holds the position of being the world's largest consumer of oil.

Additionally, the hawkish tone surrounding the US Federal Reserve (Fed) could provide support in undermining the price of the liquid gold. Market participants expect the Fed to maintain interest rates at a higher level for an extended period along with the odds of a 25 basis points (bps) rate hike through the end of the year 2023.

Traders await the upcoming data release of the EIA Crude Oil Stocks Change for the week ending on September 1, scheduled later in the day. This data release has the potential to have a significant impact on the price of WTI crude oil. Oil traders will closely analyze this data to identify trading opportunities and make informed decisions regarding WTI trades.