WTI: Concerns of deeper OPEC+ output cut, upbeat API data help extend latest recovery

WTI remains positive while taking rounds to $56.50 during the early Asian trading session on Wednesday. The energy benchmark follows the two-day-old recovery amid rising concerns of deeper production cuts by the global oil suppliers and upbeat private inventory data.

The American Petroleum Institute’s (API) Weekly Crude Oil Stock survey for the period ended on November 29 showed that the United States (US) oil inventories dropped -3.72 million barrels versus the previous readouts of 3.64 million barrels.

OPEC+ in the spotlight…

While the depletion of supply extended the black gold’s previous recovery, comments signaling the need for further global production cuts from Iraq’s Oil Minister Thamir Ghadhban offer an additional boost to the run-up. The diplomat said that the members of the OPEC+ group, Organization of the Petroleum Exporting Countries (OPEC) and their allies including Russia, prefer wider output cuts. Earlier, Saudi Arabia was also pushing for a broad product cut accord.

Oil markets seem to pay a little heed to the US-China trade worries. Herein, the US continues to dim the prospects of any phase-one deal with China in 2019 while China stands tough and announces sanctions over the Hong Kong Act.

Although OPEC+ meeting on December 05/06 becomes the key event for the oil traders, today’s official oil inventory data from the Energy Information Administration (EIA) will offer intermediate moves. The stockpile report is expected to follow the footsteps of private API numbers while flashing -1.798M figure versus +1.572M prior.

Technical Analysis

Unless bouncing back beyond 200-day Simple Moving Average (SMA) level of $57.65, prices stay vulnerable to revisit November month low surrounding $54.10.