WTI: Recovery remains capped below $37 mark amid OPEC+ uncertainty

WTI (July futures on Nymex) is ranging in the familiar trading band near mid-36s so far this Thursday, having failed yet another upside attempts just shy of the 37 mark.

At the time of writing, the US oil is down nearly 2% to trade at 36.60, having dropped for the first time in five trading sessions on Wednesday. The bearish momentum around the black gold is mainly on the back of the uncertainty on the OPEC and its allies (OPEC+) oil output cuts extensions after Saudi Arabia and Russia failed to agree on holding the meeting.

Adding to the anxiety, some OPEC sources said that the decision on the output cuts extension would be dependent on the other countries pledging to deepen the cuts. Those countries have been not complying to the OPEC+ deal.

The prices came under further selling pressure following a build in the US gasoline and distillate stockpiles, as per the latest data published by the Energy Information Administration (EIA) on Wednesday.

In the European session on Thursday, the barrel of WTI saw a spike to session highs of 36.88, in a knee-jerk reaction to the upbeat remarks from the Russian Energy Minister Alexander Novak. Novak said that the July oil market deficit may be 3-5 million barrels per day (bpd).

However, it was quickly reversed after Reuters quoted some OPEC sources, saying that the OPEC+ meeting is still possible this week if Iraq and other countries that are not complying, pledge to improve the compliance.

In the day ahead, the OPEC+ meeting related headlines will continue to drive the oil price action while broad-based US dollar bounce could also likely keep the traders cautious.

WTI technical levels to watch

“A downside break of the triangle’s support, at $36.25 now, can fetch the quote to an ascending trend line from May 27, currently around $35.60. In a case where the oil benchmark keeps the downside below $35.60, 200-HMA level of $34.55, will be the key to watch. Meanwhile, a sustained run-up past-$38.30 will enable the bulls to fill the gap below March 06 low of $41.22,” FXStreet’s Analyst Anil Panchal noted.  

WTI additional levels