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The price of West Texas Intermediate oil remains capped below the $60.00 resistance level as traders and investors keep a cautious tone ahead of today’s April OPEC meeting, despite expectations that members will keep output unchanged.
WTI oil has staged a notable rebound towards the $62.20 area last week, however, the air has started to come out the rally, and West Texas Intermediate is now treading water around the $59.00 support level.
OPEC is expected to show supply discipline later today, with a number of key OPEC members leading the call for existing output cuts to be maintained. Reports suggest that Saudi Arabia, one of the world’s largest oil producers, is willing to support keeping the cuts in place into May and even June this year.
JP Morgan Chase, a notable investment bank from the United States, has revealed that they expect OPEC to hold supply today, which should support oil prices in the near-term, although other investment banks are not quite so bullish towards OPEC holding the line.
ANZ bank from Australia has a bearish take on the oil make right now. ANZ noted “OPEC’s cautious approach to the demand recovery saw it extend production curbs into April at the last meeting. Since then the outlook hasn’t become any clearer.”
So far this year OPEC members holding supply has been bullish for the price of oil, and this would suggest that any bullish oil news from OPEC today should prop WTI back above $60.00 resistance level.
Additionally, the bank noted that the extension of lockdowns in Europe has delayed physical demand for oil, and at this juncture in time the physical market remains over-supplied. OPEC Secretary General Mohammad Barkindo went as far as saying that “the environment remains challenging, complex and uncertain.”
It is certainly possible that the price of WTI oil could remain capped below the $60.00 benchmark level, even with a supply cut extended. The oil market may need to see demand dynamic returning before a sustainable new short-term bullish trend takes hold.
Market sentiment towards WTI oil remains bullish, but not worrying so going into the OPEC meeting. The ActivTrader Market Sentiment tool showed that some 81 percent of traders were bullish last month, now sentiment has shifted to just 53 percent bullish. This sentiment dynamic suggests that WTI may be contained to range bound trading conditions.
WTI Oil Short-Term Technical Analysis
According to the four-hour time frame a bearish head and shoulders pattern appears to be forming, with bears needing to hold the price below the $57.80 level to trigger a near $5.00 price drops.
It is noteworthy that the structure of the bearish price pattern has not fully formed yet, so further upside cannot be completely discounted at this stage of bears fail to maintain the decline. Any sustained move above the $62.20 level could trigger further upside towards the $63.50, and possibly the $64.50 resistance zone.
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WTI Oil Medium-Term Technical Analysis
Looking at the daily time frame chart, a much larger head and shoulders pattern has formed, which holds a mighty $10.00 project. Bears need to break the March monthly low to activate this pattern.
The monthly chart shows that a multi-year trendline, around the $63.00 level is the foremost resistance for WTI oil this month. A breakout above this level should underpin strength in oil prices.
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