- Weak Chinese oil demand and surging US output keeps a lid on the upside.
- US rigs data and G7 meeting to offer fresh incentives to the oil traders.
WTI (oil futures on NYMEX) extends its downside consolidative-mode into a further day today, although looks set to end this week almost unchanged.
The barrel of WTI faced rejection once again near the $ 66.20 levels and dropped back below the 66.0 handle, as the bears regained poise amid signs of slowing oil demand from China, the world’s second-biggest oil consumer. Also, the ongoing rise in the US output levels and crude stockpiles build also keeps the bearish pressure intact on the commodity. The US crude oil production hit another record last week at 10.8 million barrels per day while the US crude inventories rose by 2.1 million barrels in the week to June 1.
However, the losses remain capped amid plunging Venezuelan crude exports while increased cautious tone heading into the G7 meeting leaves the black gold in tight trading range. Also, markets look forward to the US drilling sector activity report due later on Friday for fresh trading impetus on the prices.
WTI Technical levels
Flavio Tosti, Analyst at FXStreet, noted: “Oil bulls created a double bottom near the 64.12-63.72 demand zone and are currently testing the 66.00 level. Since 66.00 is an important support/resistance level a breakout above it can open the gates to further gains towards 68.30 key supply level. A failure to break above 66.00 can drive the market back to a retest of the current Thursday’s low at 64.81.”
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