WTI stays firmer past $81.00 amid oil price cap, OPEC+ chatters

• WTI picks up bids to extend the previous day’s rebound from 10-month low.
• G7 discusses price cap level on Russian oil, Moscow threatens gas supply cut to EU.
• Talks of OPEC+ output increase, a reduction in energy demand due to China’s Covid conditions challenge WTI bulls.
• Preliminary PMIs for November, EIA Crude Oil Stocks Change will be eyed for fresh impulse.

WTI crude oil defends the previous day’s recovery while picking up bids to $81.10 during early Wednesday. The black gold’s latest run-up could be linked to the headlines surrounding the Group of Seven (G7) nations’ discussions on the oil price cap on Russian exports, as well as the inventory draw conveyed by the industry source.

Weekly prints of the American Petroleum Institute’s (API) Crude Oil Stock data marked the draw of 4.8 million barrels versus -5.835M prior for the week ended on November 18.

Elsewhere, Reuters mentioned that the G7, including the United States, along with the EU and Australia are slated to implement the price cap on sea-borne exports of Russian oil on Dec. 5, as part of sanctions intended to punish Moscow for its invasion of Ukraine. The news also quotes a Senior US Official as saying, “The G7 should soon announce the price cap on Russian oil exports and the coalition will probably adjust the level a few times a year rather than monthly.”

Previous, the Wall Street Journal (WSJ) quoted Saudi Arabia as denying a production increase plan due to unease with public discussion of the group's decision-making before an agreement with Russia had been struck.

It’s worth noting, however, that the Covid woes in China and fears of economic slowdown in major economies challenge the energy demand. On the same line could be the rate hikes by the key central banks.

Looking forward, the official weekly oil inventory data from the Energy Information Administration (EIA) for the week ended on November 18, expected at 0.115M versus -5.4M prior, will be important for the oil traders to watch for clear directions. However, major attention will be given to the preliminary readings of November’s monthly activity data and Minutes of the Fed’s latest minutes. Additionally, headlines surrounding the OPEC+ and Russian oil price cap will also be crucial for a clear guide.

Technical analysis

WTI recovery remains elusive unless crossing a three-week-old descending resistance line, around $87.10 by the press time.