WTI Crude Oil is facing challenges, trading at $65.14, even with a larger drop in US crude inventories than expected. The increase in global supply from OPEC+ is outweighing the short-term decline in US stockpiles. The Energy Information Administration reported that US stockpiles decreased by 3.859 million barrels, exceeding the forecast of a 1.8 million barrel drop. However, strong supply remains from recent API and OPEC+ data, which limits price increases for WTI.

WTI Price Technical Analysis

WTI’s recent fall indicates weaker bullish momentum, struggling to stay above the 50.0% Fibonacci retracement level of the January-April drop at $67.08. The price is nearing a crucial technical area near $64.18, with strong support from various moving averages. WTI Oil is a high-quality crude type produced in the US, often serving as a market benchmark. Its price is affected by supply and demand, geopolitical events, OPEC decisions, and the value of the US Dollar. Weekly inventory reports from API and EIA significantly influence WTI prices, reflecting shifts in supply and demand. OPEC’s production choices are also important; cuts typically raise prices, while increased production can cause them to fall. Currently, crude oil is under downward pressure, with prices hovering around the $65 mark. This negative sentiment continues despite a larger-than-expected drop in US stockpiles noted by the Energy Information Administration. The market seems more focused on the likelihood of rising global supplies from major producers.

Market Outlook and Trading Strategies

Attention is now on the upcoming OPEC+ meeting, where they will decide whether to continue the voluntary cuts of 2.2 million barrels per day. Recent Reuters data shows that compliance with these cuts has been inconsistent, adding to market uncertainty. Any indication of easing these restrictions could easily push prices below current support levels. On the demand side, we’re seeing mixed signals that could lead to increased volatility. Recent data revealed that China’s manufacturing PMI unexpectedly dropped to 49.5 in May, indicating a contraction and raising concerns about consumption from this leading oil importer. This is in contrast to the usual summer demand surge from US driving. Given the current technical situation, it seems likely that prices will stay within the range of key support near $64 and resistance around $67 for now. This environment might be good for traders who sell volatility with strategies like short strangles or iron condors, allowing them to collect premiums while waiting for clearer market movements. The CBOE Crude Oil Volatility Index (OVX) near 30 suggests this period of consolidation, but traders should be ready for a potential spike. We should get ready for a potential breakout following the producer group’s meeting. Historically, unexpected decisions to tighten or loosen cuts have led WTI to change by 5-7% in just one week, as we saw after announcements in late 2022. Therefore, holding positions that benefit from increased volatility, such as a long straddle, could serve as a wise hedge against current range-bound strategies. Create your live VT Markets account and start trading now.

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