WTI slides below $57 on uncertainty over extension of oil output cut
- Doubts over the duration of OPEC oil output cut keep investors on edge.
- Brent tests $62, down 2% on the day.
- The outcome of the meeting will be announced on Thursday.
Crude oil prices remain under pressure on Wednesday as the OPEC/non-OPEC Joint Technical Committee starts its meeting in Vienna to discuss the feasibility of a possible extension of the output cut agreement. After rising above the $58 mark earlier in the day, the barrel of West Texas Intermediate lost traction and was last seen trading at $57, losing $1, or 1.7% on the day.
Eyes on OPEC meeting
Today's headlines from Vienna created some uncertainty over the outcome of the meeting. Although Kuwait's oil minister said that the committee was recommending a 9-month extension to output cut deal, Ecuador's delegate told Bloomberg that there still was no agreement on an extension.
In an interview with Gulf News, Jaafar Altaie, managing director of UAE-based Manaar Energy Consulting, explained, "Russia's stand is that bigger oil price could actually be a risk as it will encourage shale oil producers to produce more and also encourage Opec members to start cheating and increase production without complying with the deal. It will also lead to Russia increasing its own production to cash in on higher oil prices," as reported by Reuters.
On the other hand, the EIA's weekly report showed that the crude oil stocks in the U.S. decreased by 3.4 million barrels for the week ending November 24.
Technical levels to consider
The barrel of WTI could encounter the initial resistance at $58.30 (daily high) ahead of $59.05 (Nov. 24 high) and $60 (psychological level). On the downside, supports align at $56.75 (daily low), $55.60 (Nov. 20 low) and $55 (psychological level).