WTI Price Analysis: Oil retakes the 20-day SMA amid OPEC cuts rumours
- WTI rebounded at a daily low of $70.17 and managed to recover the 20-day SMA at $71.67
- Rumors of further production cuts by the OPEC give traction to the bulls.
- the gloomy economic outlook ahead of fresh rate-hike cycles limits de WTI gains.
The West Texas Intermediate (WTI) oil price trades neutral at the $71.90 area on Tuesday’s American session after clearing daily losses as the prospects of more production cuts by Saudi Arabia seem to be giving traction to the black gold. On the other hand, the gloomy economic outlook is the main factor responsible for pushing prices lower.
Global economic downturn fears to limit bulls momentum
Next week, the Federal Reserve (Fed), the European Central Bank (ECB) and the Bank of England (BoE) will announce their monetary policy decisions. For the US central bank, market expectations regarding the decision are mixed while a rate hike from the ECB is widely expected. Interest rates tend to be negatively correlated with economic activity and hence, may weigh on Oil prices. In addition, the latest economic data from the S&P Global and Institute for Supply Management (ISM) revealed weak US figures while Germany reported a technical recession following Q1 Gross Domestic Product (GDP) figures.
On the upside, the prospects of further production cuts by the Organisation of the Petroleum Exporting Countries (OPEC) give traction to the black gold. Saudi Energy Minister Prince Abdulaziz bin Salman stated on Sunday that Saudi Arabia's reduction of one million barrels per day (bpd) in oil production could be prolonged if deemed necessary, extending beyond July.
Levels to watch
The WTI price has a neutral outlook for the short term as indicators turned flat on the daily chart, suggesting that the markets are awaiting a fundamental driver for direction.
On the upside, upcoming resistance for WTI is seen at the $72.00 level, followed by $72.25 and the $73.50 area. On the downside, the next support levels to watch are the 20-day Simple Moving Average at $71.60, followed by the $71.00 level and the daily low at $70.17.
