WTI drops back to $ 71.50 as focus shifts to OPEC meeting

• Nervousness ahead of OPEC meeting overshadows easing US-Sino trade war fears.
• Sees profit-taking slide as the bulls run into the $ 72 barrier.

WTI (oil futures on NYMEX) is seen paring back gains and looks to test the $ 71.50 support area, having faced rejection just shy of the $ 72 mark amid increased investor caution, as attention turns towards the OPEC due later today for fresh insights on the output cut deal.

The barrel of WTI extends its corrective slide from multi-year tops of $ 72.30  into a third day today, as markets seek to lock-in gains ahead of the OPEC outcome while the downside is expected to remain cushioned amid easing US-China trade war tensions.

Meanwhile, tumbling production in Venezuela amid worsening financial and economic crisis and looming US sanctions against major oil producer Iran continue to buoy the sentiment around the black gold.

IEA’s Birol: Venezuela one of the biggest risks in the oil market in the coming months

Later this week, the US weekly crude supplies data and US dollar dynamics will continue to have a major influence on the prices.

WTI Technical Levels

According to Slobodan Drvenica, Information & Analysis Manager at Windsor Brokers, “Bulls eye fresh 3 ½ year high at $72.28 (posted on 17 May), break of which would expose Fibo projections at $72.48 & $72.85 (138.2% & 161.8% respectively), with stronger bullish acceleration expected to open $74.94 (Oct 2011 low) and $76.35 (Fibo 61.8% of 107.45/$26.04 fall) in extension. Top of thick rising 4-hr cloud ($71.08) and ascending 10SMA ($71.13) mark solid supports which should ideally contain dips and keep bulls intact. Res: 71.86; 72.28; 72.48; 72.85. Sup: 71.13; 70.65; 70.25; 70.00.”