Oil declined after rallying almost 10% over the past two weeks, with technical indicators suggesting recent gains may have been overdone.
West Texas Intermediate traded near $87 a barrel after a 2.3% advance last week. The 9-day relative strength index for WTI has been above a level signaling it’s overbought for more than a week. The US benchmark has surged by almost $20 a barrel since mid-June on production cuts from Saudi Arabia and Russia, which have now been extended through year-end.
There were further bullish signals over the weekend. China’s deflationary pressures eased slightly in August as consumer prices rose, a positive sign for the world’s biggest oil importer. Financial markets are also pricing in lowered odds of an recession in the US.
OPEC+ leaders Saudi Arabia and Russia last week extended their supply cuts last week. The 1 million barrel-a-day output cut the Saudis initially pledged for July will now be in place until the year-end, alongside a smaller export reduction from Russia.
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