Traders strongly react to G7 talks
Oil prices decreased by more than $2 per barrel on Wednesday. The Group of Seven (G7) countries considered a price ceiling on Russian oil. They suggested it will be above the current price of the crude grade. According to a European official on Wednesday, the G7 nations are considering setting a price restriction on Russian seaborne oil in the range of $65-70.
American officials hope to set the quota at a level that will encourage Russia to continue selling crude on the international market. They speculate pre-war levels of roughly $65 per barrel. It seems this could be considered as a possible baseline. While it is higher in the Mediterranean at about $68 per barrel, Urals crude shipped to northwest Europe is currently selling around $62-$63.
Read also: Nasdaq pauses rally as sentiment fizzles
U.S. West Texas Intermediate crude futures were down $1.57, or 1.94%, at $79.38 a barrel during the day. The price kept falling after the opening of U.S. trading session as low as $78.20. Brent crude futures had dropped $2, or 2.26%, to $86.36 a barrel, falling past $85 with U.S. session open. Oil prices resemble a free fall like pattern seen on Monday this on Wednesday.
The American Petroleum Institute late Tuesday indicated U.S. crude inventories decreased by 4.8 million barrels last week with gasoline inventories down by 400,000 barrels. The Energy Information Administration is expected to release official data on Wednesday morning.
You may also like: EUR/USD falls at the start of the week, eyes 1.02
On top of that, Shanghai tightened guidelines late on Tuesday, adding to concerns over demand in relation to China, the world’s largest importer of crude oil. Shanghai has been struggling with an increase in COVID-19 instances. The OECD’s economic forecast, which predicts a slowdown in the growth of the world economy the next year, added to the strain as well.
WTI brief technical analysis
WTI oil technical analysis, Source: Author’s analysis, tradingview.com
WTI has been turbulent this week as we are awaiting key data on December 5th regarding Russian oil price cap. The EIA Crude Oil stockpiles report will be released later today, which has a great impact on oil prices and volatility. The morning selloff broadened the price range towards Monday’s lows.
More like this: Best Buy flies after surprising earnings
The bears are winning so far. In case they break the threshold, we can see a sell off following last week’s trend to as low as new support on $75. The bulls, however, could buy out this dip and send the price back to the resistance of $82.