WTI crude oil is on track to reach the $90.00 mark.

Highlights

• OPEC+ will continue to implement production cuts until Brent oil reaches a price range of $90.00 to $100.00.
• There is a strong likelihood that the Federal Reserve will not increase interest rates in the current year, which will be beneficial for oil markets.
• The stimulus measures implemented by China are anticipated to boost the demand for oil.

Introduction
The temporary decline in oil markets was short-lived, as oil prices have recently reached new highs. WTI oil surpassed the $85.00 mark, while Brent oil approached the psychologically significant $90.00 level. Traders seem to have disregarded recession risks and China's economic issues. What is the reason behind this trend?

OPEC+ Focuses on Pushing Prices Higher
OPEC+ has learned from past mistakes and is not rushing to increase production at the first sign of rising oil prices. Both key players in the alliance, Saudi Arabia and Russia, have significant incentives to maintain their production cuts.

Saudi Arabia relies on an average oil price above $80 to balance its budget, likely requiring an even higher price due to production cuts. The kingdom is likely to aim for oil prices above $90 before considering increasing production.

For Russia, the issue is the oil price cap imposed by Western countries, limiting access to transportation and insurance. Therefore, Russia benefits from selling less oil at higher prices above the cap and has a vested interest in prolonging production cuts.

The Fed Adopts a Less Hawkish Stance
Traders anticipate that the Federal Reserve will keep the federal funds rate unchanged this year. Recent comments from Fed speakers suggest a more dovish approach. The aggressive rate hikes implemented by the Fed previously have put enough pressure on the economy and labor market. As long as Treasury yields remain below recent highs, it is likely to provide additional support to oil markets.

Traders Pin Hopes on Chinese Stimulus
China's economic performance during the first half of the year disappointed, but the country has now implemented various stimulus measures. Chinese stocks have rebounded from the lows witnessed in August, leading traders to believe that these measures will sufficiently support the economy. If China returns to normal growth, energy demand will increase, providing a bullish outlook for oil markets.

Conclusion
The combination of positive catalysts is expected to push Brent oil towards the $95.00 - $100.00 level. WTI oil, trading at a discount to Brent oil, has a good chance of settling above $90 in the coming weeks.