Oil beaten up as inventories build shows no signs of slowing down

Technical Analysis

Author: Justin Low | oil

Oil is down by 2.8% on the day

WTI 12-06
The OPEC+ deal extension can't come soon enough for oil bulls but even then, it might not even matter. With the current output cuts running, it still hasn't been enough to tame down inventories build in the market and the latest data here overnight epitomises that.

Despite sanctions against Iran and Venezuela, the market imbalance is still evident and this is basically oil markets saying that more has to be done by OPEC+ in order to suggest that price will rebound in 2H 2019.

At this point, extending the current production quotas/limits may help to appease traders for a day or two but in the bigger picture, it doesn't look like it's going to be enough to resolve the flood of supply in the market.

Looking at the chart, WTI is now resting on support from the 61.8 retracement level @ $51.62 which helped to limit declines earlier in the month. But a break below that will see price move towards a test of the pivotal $50.00 handle and things can get ugly if price starts to creep below the figure level.

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