The price of the US WTI crude oil contract, bounced higher this morning. There was news that the oil producing country of Ecuador withdrew from the OPEC led production cut scheme. Offsetting this bad news could be that Saudi Arabia is mulling a further export reduction of 1 million barrels peer day. OPEC also invited Libya, right now exempt from the cartel’s coordinated output cuts, to a strategy meeting in St. Petersburg on July 22. Libya might now be brought into the production cut scheme.
The oil rally was short lived as the API reported that US inventories added 1.63 million barrels last week. Up next, is the official EIA data. The EIA is expected to show a 3.5 million barrel drawdown over the same period. If that outcome comes close to the API number, then the WTI benchmark should face further selling pressure. This will come as the hope for a reduction in the global supply dwindles.
Crude Oil Technical Analysis
The price of crude remains below the key layer of technical resistance that lines up at $47.10 per barrel. A daily close above this first upside barrier challenges the next layer of technical resistance lining up at 48.50.
The alternative technical analysis, notes the first downside layer lining up at $45.30 per barrel. The next technical support barrier, of note, lines up at 43.80. This is the May 5 low.