Oil Drops to $48.25 Ahead of API Data and Thursday’s OPEC Meeting
After briefly rising back above $50.00 psychological mark on Tuesday, WTI crude oil futures witnessed a sharp reversal and extended its slide on Wednesday to currently trade at seven day low level near $48.25.
Traders seem to have turned cautious ahead of EIA's weekly US crude inventory data and the bi-annual OPEC meeting, both scheduled on Thursday. Most analysts are not expecting any formal agreement on curtailing production from the OPEC meeting in Vienna.
Moreover, resumption of operations from Canada after wildfires eased seems to further weigh on oil prices. Moreover, investors will also focus on development surrounding the ongoing supply disruption from Africa.
In the meantime, investors will focus on the weekly stockpile data from API, scheduled for release later during NY session. Consensus estimates point to a fall of 2.72 million barrels in crude inventories over the week to May 27, after registering a drop of 4.23 million barrels a week before.
Technical levels to watch
On a sustained weakness below $48.00 round figure mark, the commodity seems to slide immediately towards 2-week lows support near $47.40 before heading towards testing its previous strong resistance, now turned strong support, near $47.00 handle.
On the flip side, $49.00 round figure mark now seems to act as immediate resistance, which is followed by resistance near $49.50 horizontal area. However, major upside resistance remains near $50.00/barrel mark and only a sustained move above this strong resistance would negate any near-term bearish bias and boost the commodity further towards Oct. 2015 highs resistance near $51.35-40 region.