WTI faces rejection at key hurdle despite decline in US inventories
- WTI surrenders gains after facing rejection at key trendline hurdle.
- Fears that OPEC+ may ease output cuts look to be capping the upside.
West Texas Intermediate (WTI) oil is currently trading largely unchanged on the day at $40.50 per barrel, having failed to take out resistance at $40.86 early Tuesday. That level is housing the trendline connecting June 23 and June 8 highs.
The black gold rose nearly 0.5% on Tuesday, as US crude inventories fell by 8.3 million barrels in the week to July 10, beating analysts’ expectations for a decline of 2.1 million barrels. However, the recovery from $39 ran out of the steam at the trendline hurdle early Tuesday, possibly due to fears that the OPEC+, a group of major producers led by Saudi Arabia and Russia, may decide to raise output on Wednesday.
Key members of OPEC and allies including Russia, a group known as OPEC+, are set to decide whether to extend output cuts of 9.7 million barrels per day (bpd) that end in July or ease them to 7.7 million bpd, according to Reuters. A taper cannot be ruled out, as oil prices have quadrupled since hitting lows below $10 in April.
“OPEC+ decision on production cut tapering will set the tone for the oil market,” ANZ Research said in a note, according to Reuters.
A bigger-than-expected taper will likely yield a notable price pullback, more so, as the resurgence of coronavirus in the US is derailing reopening plans.
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
