WTI remains capped below $ 49 amid doubts over effectiveness of OPEC deal

Oil futures on NYMEX extends its bearish consolidation phase in the European trading, as markets continue to doubt the effectiveness of the OPEC output cut deal on limiting the global oil supply.

However, the downside remains capped amid a broadly weaker US dollar and comments from the Saudi energy minister Al-Falih, citing that the OPEC members have ‘a strong willingness’ to extend the output cuts beyond June, when it meets in May.

Additionally, the latest Reuters poll results also showed that a majority of the analysts polled see an extension of the OPEC deal in a bid to sustain the oil-price rally.        

Markets also continue to cheer the latest bullish EIA crude stockpiles report, which showed that the US crude inventories fell by 237,000 barrels in the week to March 10, beating expectations for an increase of 3.7 million barrels.

All eyes now remain on the G20 meeting, US dataflow and Bakers and Hughes rigs count data due later in the day ahead.

WTI technical levels        

A break above 50/50.11 (psychological levels/ classic R2) could yield a test of $ 50.60/84 (classic R3/ Mar 9 high), beyond which $ 51.40 (20-DMA) could be tested. While a breach of support at $ 48 (round number) would expose the 4-month lows of $ 47.09, below which downside opens up for a test of $ 46.50 (key support).