WTI drops and pops in the open on OPEC news

Oil prices start out volatile with West Texas Intermediate (WTI) dropping and popping in the open following weekend news. 

WTI is currently trading flat again at $71.40, but it fell in the open to a low of $70.99 and printed a high of $71.55.

Oil is suffering on the back of expectations of growing supplies and a rise in coronavirus cases that could lead to lockdown restrictions and depressed demand.

The weekend news

• OPEC+ agree to gradually add more oil supplies to the market

''OPEC and its allies agreed to gradually add more oil supplies to the market from August (400,000 b/d monthly hikes until Sep 2022) after Saudi Arabia and the United Arab Emirates resolved a dispute that was blocking the deal.''

On Thursday, the group announced that global demand for oil is expected to increase next year to around levels seen before the pandemic, about 100 million bpd, led by demand growth in the United States, China and India. 

Additionally, from Friday, the US oil rig count continued its slow increase, gaining two rigs this week to 380 active units, their highest since April 2020, according to energy services firm Baker Hughes. US crude production has also increased by 300,000 barrels per day (bpd) over the last two weeks, rising to 11.4 million bpd in the week ended July 9, the highest since May 2020, according to federal data. 

WTI technical analysis

Technically, the price is meeting a daily support at the lows and considering the M-formation, the price could be on the verge of an upward correction of 50% of the bearish impulse to test the prior lows of 73.20.

If the price fails to break the resistance, then it would be expected to lead to an onward downside continuation in the coming week:

The targetted area is between the 67.50s and 65.30s.