WTI headed back towards session low, EIA report in focus

WTI crude oil reversed recovery momentum back above $51.00/barrel mark and is now heading back towards the lower end of daily trading range. 

Currently trading around $50.60 region, the black gold seesawed between tepid gains and minor losses, and was seen struggling for a firm direction, as investors raised skepticism over implementations of last week's OPEC deal to cut its oil production and would actually bring an end to global supply glut, which has been the key factor weighing on oil prices since mid-2014. This coupled with, worries about cooperation from non-OPEC members capped further upside and is exerting some selling pressure following an upsurge of 15% in the aftermath of the post-OPEC deal. A meeting between OPEC and several non-OPEC members is scheduled on Saturday.

Later during NY session, the EIA will release its weekly report on domestic crude inventories and is expected to show oil stockpiles fell 1.032 million barrels last week. Meanwhile, API report on Tuesday showed a decrease in oil stocks by 2.2 million barrels and should the official report follow suite, the commodity is likely to catch fresh bids and build on to its last week's strong momentum.

Technical levels to watch

Weakness below $50.30 region (yesterday's low) now seems to drag the commodity back below $50.00 psychological mark towards testing an important support near $49.30 region with $49.80 level acting as intermediate support. On the upside, $50.90-51.00 area now becomes immediate hurdle, which if cleared decisively would trigger a fresh bout of short-covering and lift oil prices back towards $51.80-85 resistance area.