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WTI (oil futures on NYMEX) extends its downside consolidation into a third day today, as ongoing Italian political tensions continue to dampen appetite for risky/ higher-yielding assets such as oil.

Moreover, rising expectations that Saudi Arabia and Russia would raise the OPEC and non-OPEC output by around 1 million bpd when they meet next month in Vienna, also collaborates to the weakness in oil prices.  The move could be to counter a potential supply shortfall expected due to the Venezuelan economic crisis and prospects of the US sanctions on Iran’s oil exports.  

However, the prices managed to find some support amid broad-based US dollar weakness, triggered by a sharp corrective rally seen in the EUR/USD pair. A weaker US dollar makes the USD-denominated oil less expensive for the foreign buyers and vice-versa.

Markets now eagerly await the weekly US crude inventory data due to be published by the American Petroleum Institute (API) for the next direction on the prices.

WTI Technical levels

FXStreet’s Analyst Omkar Godbole noted: “The dip to trendline support was short-lived in the last two days as indicated by the long wicks (tails) of the daily candles. Further, the long-term moving averages – 50,100 & 200 are still rising, so long-run outlook remains bullish. However, only a close above the 50-day MA, seen today at $67.72, would add credence to the solid defense of rising trendline and would allow a rally to $70.00 and above. On the downside, multiple daily closes below the rising trendline would open doors for a deeper pullback to $62.00 (April lows).”