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  • WTI off 3-month highs, but buoyed by output cuts extension talks.
  • Renewed US-China trade war fear saps energy out of the bulls.
  • All eyes on the risk trends and US weekly crude supplies.

WTI (July futures on Nymex) is posting small losses in the European session, extending its upside consolidation phase from three-month tops of 35.89, reached in early Asia.

The sellers continue to lurk on every attempt above the 35.50 barrier, in light of the latest shift in the risk sentiment on the report that China has asked its local firms to stop importing US farm goods. This comes as Beijing evaluates the US action on the Hong Kong issue. Investors remain wary about its impact on the US-China phase one trade agreement.

Meanwhile, the black gold continues to draw support from the talks around the OPEC+ oil output cuts extension, with the latest Reuters report citing that the OPEC and Russia are moving closer to a compromise on the duration of record oil output cuts extensions by one or two months.

Further, the optimism about the global economic recovery, as the economies re-open up from the coronavirus-imposed lockdown restrictions, helps the bulls hold on to the 35 mark. The barrel of WTI also benefits from a broadly weaker US dollar, with the US dollar index nursing losses around 98.00.

Meanwhile, markets digest the news that Saudi Arabia is expected to raise its official selling price (OSP) for all grades it sells to Asia in July. Next of relevance for the oil traders remain the US ISM Manufacturing PMI report and the weekly US crude supplies data for near-term trading impetus.

WTI technical levels to watch

The bears remain in control, with the immediate support aligned at 35.00 (round figure), below which the next support awaits at 34.58/52 (100, 5-DMA). To the upside, the three-month highs of 35.89 could be tested, as the bulls target the 36 handle.

WTI additional levels