WTI tumbles almost 10% on Thursday despite agreement on output cut

• Price of WTI barrel retreats 20% from daily high, drops to one-week lows.
• Volatility remains at extreme level despite OPEC+ agreement. 

The price of crude oil reversed sharply and tumbled further into the settlement. The WTI barrel traded on Thursday as high as $28.30 and settle at $22.76, a decline of 9%. In the futures market, WTI was trading around $23.30, still making sharp moves, moving modestly away from the low it hit at $22.58. 

The slide in prices took place despite the agreement at the OPEC+ to cut output. Iran’s Oil Minister said the cut will be of 10-11 million bps, “apart from the cuts expected of countries such as Brazil, Norway and the US”. 

The agreement did not boost prices and contributed to volatility. Production cuts are only a part of the problem, the supply side. The other factor keeping prices depressed is the demand that is expected to decline further as the world heads into recession. 

Technical levels