WTI reverses sharply from 5-week tops, EIA report and OPEC meeting awaited

WTI crude oil witnessed a sharp reversal from 5-week tops near $51.75 and has now dropped to fresh session low near $51.25-30 region.

Ahead of the crucial meeting between OPEC and non-OPEC producers, prospects of falling US supplies, as revealed by the latest API report, helped push oil prices to its highest level since April 20. The American Petroleum Institute (API) reported a decline of 1.5 million barrels in US crude supplies for the week ended May 19 and raised expectations of a similar decline from a more market-sensitive official EIA data, due later during the NY session.

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The black gold, however, lost its upside momentum and in absence of any fresh news/development the retracement could be solely attributed to profit-taking ahead of the key data and major event risk. 

Meanwhile, market seems to have already factored-in a possible outcome of a 9-month extension for OPEC-led production cut deal and hence, traders seemed inclined to safeguard themselves in case of any downside risk.

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Later during the NY session, the release of FOMC meeting minutes would influence the US Dollar price-dynamics and eventually provide some impetus for dollar-denominated commodities, including oil.

Technical levels to watch

A follow through retracement below $51.00 mark, the corrective slide could get extended towards $50.40 support ahead of the key $50.00 psychological mark. On the upside, the $52.00 handle now becomes immediate hurdle, which if cleared could lift the commodity towards testing $52.60-65 resistance area en-route $53.00 round figure mark.