WTI on a steady decline as oversupply worries resurface
|Oil futures on NYMEX failed once again to resist above $ 50 threshold, and from there is on a declining trend, now breaching $ 49.50 support.
WTI awaits weekly supply reports
The black gold extended losses from the last US session, as markets continue to remain wary, whether the extension of the OPEC output cut deal will help reduce the global supply glut and in turn rebalance oil markets, which the OPEC’s ultimate aim.
The oversupply concerns returned to markets amid rising US shale output and weighed negatively on the US oil. Moreover, major oil analysts have reduced their oil-price forecast, despite the OPEC cuts extension, which collaborated to the downbeat tone around oil.
Morgan Stanley Cut WTI Oil Price Forecast to $55, while Goldman Sachs slashed their forecasts for oil prices, saying that falling US production costs will keep supply rising for years to come.
However, losses remains restricted as the US summer driving season gets underway. As explained by Reuters, demand in the US for transport fuels tends to rise as families visit friends and relatives or go on vacation during the Northern Hemisphere summer.
At the time of writing, WTI loses -0.58% to 49.52, while Brent is down -0.91% to $ 52.16.
WTI technical levels
A break above $ 50 (round number) could yield a test of $ 50.50 (psychological levels) beyond which $ 51.06 (May 21 high) could be tested. While a breach of $ 48.18 (six-day low) would expose $ 47.75 (May 15 low), below which downside opens up for a test of $ 47.35 (May 11 & 12 low).
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