WTI oil remains in red on Thursday and extends south, following Wednesday’s 3% drop, as markets anticipate increased supplies after a compromise deal between leading OPEC producers. Saudi Arabia and the United Arab Emirates reached a compromise that should result in a deal to supply more oil to the market and cool soaring prices.
Current easing is still seen as positioning for the fresh rise, as demand growth beats supply growth that keeps the oil market in deficit and boosts expectations that supplies would remain tight in coming months despite the possibility that the OPEC+ group would finalize an agreement to raise production.
US crude inventories fell for an eighth straight week, but fuel and diesel stockpiles rose to provide little support to the oil prices. Traders opted to take profits after oil price hit the highest level since November 2014 and look for fresh direction signals.
Fresh bears eye pivotal supports at $71.06/$70.75 (Fibo 38.2% of $61.54/$76.95 upleg/July 8 low) break of which would complete a failure swing pattern on the daily chart and generate the stronger bearish signal. Extended dips should stay above psychological $70 support to keep larger bulls in play for a fresh push higher.
Res: 72.55, 72.93, 73.55, 73.89. Sup: 71.06, 70.75, 70.00, 69.75.