Tuesday’s Asian session saw Western Texas Intermediate (WTI) Crude Oil prices begin a positive consolidation phase and fluctuate in a range around the mid-$85.00s, just below the 2023 peak set the day before.

The likelihood of constrained global supplies and expectations for a rebound in Chinese demand both prove to be significant drivers of the black liquid’s price. The Organisation of the Petroleum Exporting Countries (OPEC) and its partners (OPEC+) are actually expected to extend output curbs through the end of the year, according to investors. Furthermore, it is expected that Saudi Arabia, the top oil exporter in the world, will extend its voluntary 1 million barrels per day (bpd) cut for a fourth straight month into October.

Additionally, the limits for ongoing export cuts were agreed upon by Moscow and its OPEC+ allies in October, according to Russian Deputy Prime Minister Alexander Novak. Investors are now anticipating additional information on the deal, which will be made public this week. In the interim, there is hope that new Chinese stimulus measures to bolster a faltering economic recovery could increase fuel consumption and strengthen WTI Crude Oil prices even more. This in turn strengthens the likelihood of more gains.

A slightly softer tone surrounding the US Dollar (USD), dragged down by a growing consensus that the Federal Reserve (Fed) will moderate its hawkish posture, may also support the pricing of commodities priced in USD, notably oil. The work economy appears to have somewhat deteriorated, according to the conflicting US jobs report released on Friday. The Fed has less room to raise interest rates as a result. In fact, it is widely expected that the Fed will maintain current interest rates at its policy meeting in September.

Given the aforementioned underlying backdrop, it appears that an increase in the price of WTI Crude Oil is the path of least resistance. Nevertheless, oscillators on the daily chart have been moving into overbought territory. This, in turn, is preventing bullish traders from making new bets and, at least temporarily, restricting the upside.

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