WTI is trading sub the $49 handle at the time of writing with spot at 44.95 from a high of 51.67 and a low of 48.41.
WTI is jittery and on the backfoot with bears in charge due to the Organization of the Petroleum Exporting Countries’ decision to extend production cuts by nine months. Traders were caught off guard, expecting the cartel to make deeper cuts to output or perhaps just keep the agreement in place for another year. This is a classic case of buy the rumour, sell the fact price action after a spell of sideways tight channel trading of recent sessions where key MA's were converging on the daily charts. When OPEC made their intentions known, there was nowhere left for prices to go but lower and stops were triggered.
OPEC and today's key news on Oil:
- OPEC, non-OPEC oil output cuts remains about 1.8 million barrels per day - REU
- OPEC Conference President: exports will drop as summer domestic use rises
- OPEC Conference President: all indications are that nine-month extension is optimal
- OPEC Conference President: we can extend oil output deal in November
- Saudi OilMin: Consensus is that deeper cuts not needed now
- Iran Oil Minister confirms OPEC, non-OPEC rollover of nine months
- OPEC Conference President: long-term trend will be healthy
- Iraqi OilMin: Oil market will be stabilized by 9-month extension
- Oil sees a flash crash as OPEC seems ready to extend cuts for 9 months
- Oil Market: Winding road to rebalancing – BMO CM
- OPEC delegate: OPEC doesn’t plan to add 3-month option to 9-month extension
- Saudi EnergyMin: Oil market rebalancing partially achieved
WTI levels
WTI oil is now below both the 50 and 200-day moving averages at 50- $49.59 a barrel and $49.55 respectively. Next target to the downside is a break of the 48.41 lows and 18th May low at 47.93. To the upside, a recovery above the 20 and 200 sma converging on the 4hr chart would be putting the gears back into neutral.
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