WTI is off the lows today - seen at $65.80, now trading up to $66.90
But no doubt momentum remains with the sellers right now. The key story for oil was from last Friday's news that Saudi Arabia and Russia have confirmed easing of the current output cuts agreement ahead of the OPEC meeting in Vienna next month.
That's triggering a bout of selling in oil, with questions of a peak being reached after Brent briefly eclipsed the $80 handle in trading last week too.
The downside today tested the trendline support that stretches back to September last year and WTI saw a bounce. That will be the key support to watch in terms of establishing a further bearish momentum in oil prices over trading this week.
But just below it there's additional support in the form of the 50.0 retracement level @ $65.45 but more importantly the 100-day MA (red line) at $65.11. The region between those two levels will be key for buyers to hold on to.
A break below reaffirms further near-term bearish bias, as traders look to price in the easing of output cuts that will be announced in the aftermath of next month's OPEC meeting on 22 June. For buyers, though it is tough, getting above $70 would be a key first step to halt the downside momentum.
With oil, it more often has been a case of buy the rumour, sell the fact. But the issue here is that there isn't a set quantifiable outcome to fully price in. If the output cuts are relaxed more than the 1 million bpd that is rumoured, expect oil to sell off more. That, along with the fact that OPEC+ members are talking about trying to bring down compliance back to 100% - which means more supply in the market.
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