Oil futures on NYMEX are seen extending their Asian consolidation box into Europe, as investors gear up for the all-important OPEC meeting scheduled in Vienna to discuss the OPEC output cut deal extension.
The bulls take a breather ahead of the OPEC meeting, as markets have almost priced-in a 9-month extension to the production cuts deal reached by the OPEC last November, with the OPEC’s major oil producing nations – Saudi and Iraq having agreed that oil output cut needs 9-month extension.
Further, the gains also remain capped as investors react somewhat negatively to a smaller-than-expected US gasoline stocks draw, as reported in the EIA crude inventory report.
Looking ahead, oil prices may witness a sharp sell-off on an output cut extension decision by the OPEC and non-OPEC members, on the back of ‘Sell the Fact’ trading.
WTI technical levels
A break above $ 52 (round number) could yield a test of $ 52.65 (May 19 high) beyond which $ 53 (round number) could be tested. While a breach of $ 51.28 (5-DMA) would expose $ 50.42 (200-DMA), below which downside opens up for a test of $ 49.88 (50-DMA).
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