WTI extends its upside below $91.00 amid a tight supply outlook

• WTI gains momentum around $90.90, the highest level since November 2022.
• Oil supply cuts by Saudi Arabia and Russia boost the WTI prices.
• Saudi Arabia’s Energy Minister said OPEC+ is working to keep oil markets stable amid the uncertainty on China’s demand.

Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around the $90.90 mark so far on Tuesday. WTI prices gain momentum due to a tight supply outlook by Saudi Arabia and Russia. However, a fear of an economic slowdown in China might limit the upside in WTI prices.

The uptick in WTI prices in recent weeks is bolstered by oil supply cuts by Saudi Arabia and Russia. That said, the world's two largest oil exporters announced prolonged oil output curbs until the end of 2023. Through the end of 2023, Saudi oil output will be closer to 1.3 million barrels per day. Additionally, the International Energy Agency (IEA) warned earlier this week that oil market deficits would worsen in the fourth quarter with the summer-announced oil production cuts by Saudi Arabia and Russia exacerbating the situation.

On Monday, Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman stated that the Organization of Petroleum Export Countries and its allies (OPEC+) are working to keep oil markets stable and improve global energy security, without targeting any specific price level for crude. However, he added that uncertainty on China’s demand is one of the key drivers of global crude prices.

Looking ahead, oil traders will closely monitor the Federal Reserve (Fed) Interest Rate Decision on Wednesday. The market expects the Federal Reserve (Fed) to maintain interest rates unchanged at its policy meeting on Wednesday while keeping one more rate hike on the table. Also, API and IEA will release Crude Oil Stock data for the week ending September 15. On Friday, the US preliminary S&P Global PMI data for September will be due. 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 prices.