WTI eases from 2-year tops, but losses capped ahead of OPEC

• The US drilling report continues to remain a drag.
• Hopes of the OPEC output cuts extension underpin.
• Eyes on the US weekly supplies and OPEC outcome.

WTI (oil futures on NYMEX) stalled its retreat from two-year highs, although remains under pressure, as market turn cautious ahead of the two-day OPEC meeting, commencing this Wednesday.

WTI: OPEC meeting holds the key

The black gold faced rejection just ahead of the $ 59 mark and from there drifted lower, now consolidating the retreat, as the bulls face exhaustion after last week’s extensive rally.

Oil prices remain weighted by Friday’s downbeat US drilling activity report, which showed that the US energy companies last week added oil rigs, with the monthly rig count increasing for the first time since July, to 747 active rigs, as cited by Reuters.

However, the downside remains cushioned amid expectations that the OPEC and non-OPEC members will agree to extend the oil output cuts beyond March 2018, as oil market rebalancing continues.

Meanwhile, the latest remarks from the Russian Energy Minister Novak also remains oil-supportive. Novak said that “all OPEC and parties in favor of pact extension.” Also, in the view of Barclay’s Research Team, the OPEC is likely to extend the output cuts deal by 6 or 9 months, when they meet in Vienna later this week.

In the meantime, the focus will remain on the US weekly crude stockpiles report for fresh impetus. At the time of writing, WTI drops -0.73% to $ 58.53, while Brent gains +0.32% to $ 63.63.

WTI Technical Levels

Higher-side levels: $ 59.03 (2-year highs), $ 60 (psychological levels), $ 61.82 (June-mid 2015 high)

Lower-side levels: $ 58.00 (round number), 57.40 (5-DMA), 56.99 (20-DMA)