Market analysis: WTI turns lower ahead of the OPEC+ meeting

Crude oil prices extend their losses on Thursday. US crude (WTI) has pulled back to $78.50 per barrel, ending the bullish attempt to regain the $80 handle after bouncing from $76 earlier this week. The $78 mark is offering some immediate support but this level is unlikely to hold if the bearish momentum deepens.

US crude (WTI) daily chart

(Past performance is not a reliable indicator of future results)

What looked like a false breakdown last week led to a resurgence of bullish appetite on Friday, but the current setup suggests the resistance wasn’t so futile. The pattern of higher highs since the beginning of May has created an ascending trendline which could continue to offer resistance if the momentum turns higher once again. Beyond this line, the area between $85.65 and $82.54 continues to be a key focus for support/resistance. On the downside, a pattern of lower lows is forming, suggesting a descending trendline could offer support around $75.70 over the coming days if the pullback deepens.

The fact that geopolitical tensions remain – and seem to be growing once again – could mean oil prices remain supported around current levels. Meanwhile, focus on how the Federal Reserve monetary policy evolves will likely remain. Ongoing inflationary pressures could hinder oil’s performance.

Traders will likely be eyeing the OPEC+ meeting on Sunday. The current voluntary production cuts of 2.2 million bpd are expected to be expected until the end of the summer in an attempt to support oil prices further., especially given the drop in the past two months. If things don’t go as expected, the oil market could see some turmoil next week, with prices likely dropping substantially.