Brent oil regains bid tone as OPEC meets in Vienna

Brent oil regained bid tone in Asia to trade above the $54.00 mark on speculation the OPEC is set to extend the oil output cut deal by nine months.

Prices dipped to a low of $53.65 in the overnight trade as investors reacted to a smaller-than-expected US gasoline stocks draw. The Energy Information Administration data showed gasoline inventories fell only 787,000 barrels, compared with expectations for a 1.2 million barrel draw. The losses in oil prices were capped by the fact that oil inventories registered their seventh straight weekly drop in the week ended May 19 (actual 4.4 million barrels, expected 2.4 million barrels).

The focus today is on the OPEC and non-OPEC meeting. Major oil producers are scheduled to decide whether to extend an agreement to cut world supply. The latest report from Goldman Sachs talks about short-term relief from the extended global oil deal and a potential for fresh oil market glut in 2018.

As of now, the markets are not worried about Goldman’s long-run bearish call as consensus is growing on extending the cap by another nine months.

Brent Oil Technical Levels

Brent was last seen trading around $54.30/barrel. Yesterday’s high of $54.49 if breached would open doors for $55.02 (Mar 2 low) and $55.16 (Feb 16 low). On the lower side, breach of support at $53.83 (session low) could yield a pullback to $53.23 (May 23 low) and $52.47 (50-DMA).