Oil plugs higher despite potential for OPEC production increases, WTI sees $65.50

Oil is grinding higher, with WTI crude prices testing into the 65.50 level after a bumpy ride on Wednesday that ultimately sees crude on the rise as Iran loosens its previous position, open to the possibility of production increases being pushed by Saudi Arabia and Russia.

The possibility of an OPEC production limit increase is moving back towards reality after Iran conceded the possibility of allowing OPEC production limits to move higher today. Saudi Arabia has joined with Russia and are looking to lift oil production caps that went into place to prevent a further slide of oil prices as a supply overhang from the US threatened global oil markets. Demand appears to have finally caught up with supply, and now key players in the oil markets are looking to allow some more slack back into the markets, though Iran had previously joined up with Iraw and Venezuela saying they will not back the limit lifts.

The possibility of production increases had little bearish effect on oil prices thanks to another reduction in US crude stocks, which shows that the US' internal demand is continuing to eat away at clogged supply lines for crude products.

WTI levels to watch

Wednesday's action whipped new near-term barriers on either side of the bids today, with yesterday's high making a new barrier at 66.25 and the day's low marking out a lowside boundary at 64.70; continued bullish action will see further resistance at the key 67.00 handle near last week's high, while resumed selling will quickly run into the week's low at 63.35.