WTI drops below $49, still up more than 2% on day
Crude oil prices rose sharply on Monday as Saudi Arabia and Russia agreed that they need to extend output cuts for another nine months until March 2018. Following this development, the barrel of West Texas Intermediate reached its highest level since April 28 at $49.66 and started to retrace its gains in the late NA session. At the moment, the barrel of WTI is trading at $48.84, gaining 2.05%, or 1$, on the day.
Earlier today, Saudi Energy Minister Khalid al-Falih and his Russian counterpart Alexander Novak reiterated their commitment to battle the crude oil supply glut by saying they were ready to do "whatever it takes." The Organization of the Petroleum Exporting Countries will meet in Vienna on May 25 to decide on whether or not they will extend output cuts agreed in December last year.
- Russia, Saudi Arabia in favour of extending output cut deal to March 2018
- OPEC Source: Oil inventory in floating storage has declined by a third since start of 2017
Now investors will look to further developments on this subject, as well as this week's crude oil inventory reports from the United States. If the inventories continue to fall, the WTI could build up on its recent gains. Reuters just announced that they expect tomorrow's API weekly crude oil stock to come in at -2.3 million barrels after last week's 5.78 million barrels drop.
Technical outlook
The barrel of WTI could encounter the initial hurdle at $49 (psychological level) ahead of $49.66 (daily high) and $50 (psychological level). To the downside, supports could be seen at $48.25 (May 3 high), $47.75 (May 4 high) and $47 (psychological level).
- Oil: Prices trading volatile - BBH