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  • WTI drops to the lowest levels fr the US session on news that Russia is not supporting a deeper oil output cut.
  • OPEC+ committee extended its meeting into a third day on Wednesday.

The price of a barrel of oil took on a fresh low in late US trade on Wednesday following news that the Russians were not supporting a deeper oil output cut and instead, were suggesting an extension of the current pact. West Texas Intermediate crude oil dropped to a fresh low of $50.42 for the US session having travelled to a high of $51.85 on the day from $49.41 overnight on improved risk sentiment and expectations of intervention from OPEC.

OPEC to debate again on Thursday 

An OPEC+ committee extended its meeting into a third day on Wednesday and would debate again on Thursday the need to cut oil output in response to the coronavirus’ impact on energy demand and global economic growth. Meanwhile, following a settlement at a more than one-year low under $50 the prior day, oil futures finished higher as a weekly decline in US gasoline and distillate stockpiles and in anticipation of cuts. March West Texas Intermediate oil CLH20, +2.70% rose $1.14, or 2.3%, to settle at $50.75bbl on the New York Mercantile Exchange.

OPEC’s technical committee is still presumed to result in a curtailment. “The size and time-length of the emergency curtailment would remain critical questions for energy market participants — but early signs of easing virus fears could also imply a less prolonged demand hit than initially anticipated,” analysts at TD Securities argued.

“A large OPEC+ emergency curtailment, combined with Libyan and Iraqi disruptions could put a floor in prices. Mean-reversion indicators, which have performed smartly over the past 3m, continue to point in favor of the longs — while the completion of a CTA selling program will remove some downward pressure in WTI crude going forward, but we expect algos to play catch-up in Brent crude and gasoline. In other words, the seeds required for a bounce higher in oil prices are being planted, but in contrast to industrial metals, we may still be too early for the optimists.”

WTI levels