Oil is contesting with resistance from the 100 and 200-daily moving averages

WTI 26-06

Oil is posting some decent gains on the day with WTI up by 1.8% currently as price flirts with key technical levels in the form of the 100-day MA (red line) @ $58.67 and the 200-day MA (blue line) @ $58.96 currently.

The gains come as private survey data showed a larger-than-expected draw in crude inventories overnight and is helping to give price a near-term lift with the bigger focus being on the OPEC+ meeting set for 1-2 July next week.

Looking ahead, US-China trade talks will also play a role in helping to influence oil prices via risk sentiment in general but ultimately, it'll be down to OPEC+ and their meeting decision to determine if any directional move can stay the course later on in the year.

With geopolitical tensions between US and Iran still raging on, a combo of improved trade relations between US and China and OPEC+ announcing an extension to its output cuts deal may help to give oil prices a further lift in the short-term.

However, do be reminded that in recent weeks we have seen that the current output cuts quota isn't really cutting it in the bigger picture and that oil supply and inventories remain bloated while at the same time also outweighing demand for the most part.

So, unless OPEC+ steps up with more measures to curb production further, it's hard to imagine the announcement of an extension to be enough to keep oil prices underpinned in 2H 2019 - particularly in a period when seasonal demand tends to suffer.

If you pair the above reasoning with the technical levels on the chart, it presents an attractive proposition to go short on oil but I reckon there's room to wait for more clarity from trade and OPEC+ developments still to come in the next week.

That'd be the safer and more logical bet in my view. Besides, who knows what sort of surprises that could come over the next few days.