Oil jumps to 7 year high as OPEC+ sticks to output plan

Oil trades at highest level since 2014 post OPEC+ meeting

Oil prices are bounding higher after OPEC+ agreed to stick with the current 400k barrel per day increase to production from November, as agreed in July.

Heading into the meeting there had been rising expectations that the oil cartel could look to raise production by a further 400k barrel per day amid growing pressure from the likes of the US and India for cheaper oil, particularly given the spreading energy crunch and rising inflationary pressures.

Oil prices have surged higher across the year as demand from economies reopening out-stripped supply and has remained elevated since. Demand is expected to continue out-stripping supply by around 1.5 million barrels per day for the next six months according to Citigroup.

In addition to reopening demand, surging natural gas prices are also under pinning oil demand. Amid the ongoing energy crunch in Asia and Europe oil is comparatively cheap next to gas now, which is prompting expectations of a large scale switch in energy supply to petroleum based fuels.

Meanwhile supply shocks have also supported the price of oil, after oil producers have struggled to get full production back online following hurricanes and tropical storms in the Gulf of Mexico. Furthermore, some OPEC countries such as Angola and Cambodia have struggled to ramp up output to the increased OPEC quota due to a lack of investment or maintenance issues.

The jump in oil prices will do little to ease concerns over persistently high inflation. Rising energy costs could quickly filter through economies lifting prices resulting in elevated inflation becoming entrenched. This comes at a time when growth is also showing signs of slowing, prompting stagflation fears.

Learn more about trading oil

Where next for WTI crude oil?

WTI crude oil trades within an ascending channel since late August. The price has broken above the previous high of 76.64 reaching 78.24. The RSI has tipped into overbought territory, so there could be some consolidation sat these levels of even a pull back. Bulls will be aiming for $80.00 the key psychological level and the upper band of the rising channel. On the flip side, support can be seen at 76.64 the previous high ahead of 74.10 the high 30 July and the lower band of the rising channel.

How to trade with City Index

Follow these easy steps to start trading with City Index today:

Open a City Index account, or log-in if you’re already a customer.
Search for the market you want to trade in our award-winning platform.
Choose your position and size, and your stop and limit levels
Place the trade.

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.