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  • WTI pulls back from two-month highs of $33.06 reached on Monday. 
  • Bulls look to be having a breather, having engineered a stellar rally from March lows. 
  • OPEC may extend outputs for the rest of the year. 

West Texas Intermediate (WTI) is currently trading near $32.15 per barrel, having hit a high of $33.06 on Monday. That was the highest level since March 16. 

The pullback could be associated with profit taking or short-duration technical charts indicating overbought conditions The black gold rallied nearly 30% in the last three days and is currently up over 200% from the lows observed in April. 

Looking forward, analysts expect oil to remain bid as major nations are easing restrictions put in place to contain the coronavirus outbreak. Further, production cuts by OPEC+, a group of producers led by Russia and Saudi Arabia, could support prices. The cartel agreed to reduce output by 9.7 million barrels per day following the price sell-off in April. The deal came into effect on May. 1. 

In fact, Energy Intelligence reported on Monday that the OPEC might extend the cuts through the rest of the year. 

That said, if tensions between the US and China escalate, the optimism on the demand side front will wane, possibly leading to a fresh drop in oil prices. Also, investors may adopt a cautious approach on fears that easing of restrictions would lead to the second wave of infections. 

Technical levels