• West Texas Intermediate holds in the bullish territory above the gap. 
• OPEC+ cartel surprised the market with a 1.1-million barrel per day cut to production to support prices.

West Texas Intermediate WTI crude oil rose 6.3% on Monday and is trading at $80.44 at the time of writing. The high of the day was $81.51 while the low of the day is at $79.05.  The rally in the oil price came after the OPEC+ cartel surprised the market with a 1.1-million barrel per day cut to production to support prices with the cartel saying it will reduce output ahead of the group's ministerial meeting scheduled for Monday.

It has been said that Saudi Arabia will make the bulk of the cuts, reducing output by 0.5-million barrels per day, with Russia and other members also agreeing to lower exports. ´´While the surprise production cuts from OPEC+ sent crude prices rallying, it appears unlikely to induce a further bid from CTAs just yet, with momentum signals needing prices to increase north of $85/bbl and $88/bbl for WTI and Brent crude respectively,´´ analysts at TD Securities said.,

According to the International Energy Agency, the cuts come as global inventories were on the rise, with production seen exceeding demand in the first half of the year. Meanwhile, the agency expects demand to rise above production in the second half of the year. 

Nonetheless, the analysts at TD Securities explained that CTA positioning remains skewed short which suggests there is plenty of dry powder for additional buying as physical markets are now likely to tighten quicker than previously anticipated.

´´Indeed,´´ the analysts added,´´time spreads have signaled tighter markets in the aftermath of the production cuts, and on a longer-term horizon, demand expectations remain optimistic as Chinese re-opening demand takes hold.´´

The analysts concluded that ´´this could again see speculative long exposure built back up as the year progresses, which in turn could be the catalyst to kickstart further short covering from CTAs.´´