WTI drops near 2% to sub-$56.00 levels

• The barrel of the WTI has returned to levels below the $56.00 mark.
• IEA’s Birol said earlier that cutting production could be negative.
• Russia poured cold water over the likelihood of output cuts.

Prices of the barrel of the West Texas Intermediate have started the week on a negative fashion and have returned to the area below the $56.00 handle, or down nearly 2% for the day.

WTI volatile on OPEC, Russia headlines

Prices of the WTI are testing the area of 3-day lows in sub-$56.00 levels in response to comments from Russia’s energy minister A.Novak, who said earlier in the day that the country and the cartel should assess the oil market in the next weeks prior to decide on production cuts. Novak thus talked down the probability of an output cut deal by OPEC+ at the November meeting, impacting on today’s price action.

Earlier in the session, IEA’s Birol said that significant production cuts could be negative for markets, adding that US exemptions of sanctions against Iran have surpassed market expectations, motivating prices to correct lower.

Collaborating with the downside pressure in prices, it is worth mentioning the noticeable build in US crude oil supplies last week as reported by the EIA and the uptick in US oil rig count according to the latest report by driller Baker Hughes.

WTI significant levels

At the moment the barrel of WTI is losing 1.78% at $55.80 facing the next support at $54.76 (2018 low Nov.14) seconded by $54.54 (monthly high Sep.28 2017) and then $48.92 (monthly low Oct.6 2017). On the upside, a breakout of $58.34 (10-day SMA) would open the door to $62.22 (21-day SMA) and finally $67.85 (high Oct.29).