Pre Open US - US Oil 18 July 2023

After the disruption caused by protests at Libyan oil fields, production has now resumed. However, the market is tightening due to reduced exports from Saudi Arabia and Russia, as reported by the bank. Russian crude shipments have dropped by 25% in the first four weeks of July, while Saudi Arabia has raised the official selling prices for its crude and cut production by 1 million b/d, resulting in a decline of 400,000 b/d in exports during the first half of the month.

The National Bank of Canada indicates a shifting sentiment in favor of crude oil, driven by expected draws in crude and petroleum product inventories, operational and political disruptions in Africa, and a clearer understanding of the impact and timing of production cuts. While the bank anticipates a relatively weaker second quarter, it acknowledges that this sentiment is already reflected in the consensus. Looking ahead to the second half of the year, the National Bank maintains a positive outlook and identifies opportunities for relative outperformance.

WTI crude oil reached a price level of 77.25, encountering resistance from the 200-day moving average (200MA) on the daily chart. Subsequently, there was a correction towards the support level of 74.00. It is important to note that the 74.00 level had previously served as resistance on multiple occasions in the past three months.