Latest EIA data recorded a 4.43mn barrel decline in inventories for the latest week. WTI traded higher this morning, hitting the highest level of 51.96, last seen on April 19.
However, it was followed by a retracement after OPEC announced the existing output cut agreement to be extended for 9 months, as markets have largely priced in the expectations. The announcement was in line with the consensus.
The price rebounded after testing the significant support line at 50.00, where provide a stronger support.
Some OPEC member states exempted from the agreement, such as Iran, Libya, and Nigeria, have been increasing their production. Some non-OPEC oil producers, such as Russia and Ka-zakhstan, also attempt to enlarge their production.
In addition, the US shale oil industry has seen a marked recovery since February last year be-cause of higher oil prices. The US Baker Hughes data (that records the number of new Oil Rigs) is showing additional Rigs added every week.
In general, the oil supply remains high, which has and will offset OPEC’s output cut effort to an extent.
The price will likely consolidate above the level at 50.00. It is not likely to see subsequent strong bullish momentum to boost the price further up.
The resistance level is at 51.20, followed by 51.50 and 52.00.
The support line is at 50.50, followed by 50.00 and 49.60.