WTI drops on Keystone pipeline restart, doubts over OPEC cuts

• Canadian Keystone pipeline restarts.
• Uncertainty over the OPEC output cuts extension weighs.
• API crude inventory report on tap.

WTI (oil futures on NYMEX) failed several attempts to regain the 58 handle and fell sharply on Tuesday, as sentiment deteriorates further heading towards the OPEC meeting, starting tomorrow.  

WTI: 10-DMA at $ 57.58 tested

The black gold maintained its offered tone for the second straight session, extending its retreat from two-year tops to $ 59.03. The losses are mainly driven by increased uncertainty amongst the OPEC and non-OPEC members over a possible extension of output cuts beyond March 2018.

Meanwhile, oil prices also came under pressure after the latest reports cited that the Canadian Keystone pipeline restarted, fuelling expectations of higher oil supply. The pipeline opened up after nearly two weeks of shutdown, induced by 5,000 barrels of oil spill in rural South Dakota.

Attention now turns towards the API crude stockpiles report due later in the American session for fresh trading impetus ahead of the OPEC meeting. At the time of writing, WTI drops -0.83% to $ 57.63, while Brent loses -0.58% and defends the $ 63 mark.

WTI Technical Levels

Higher-side levels: $ 59.03 (2-year highs), $ 60 (psychological levels), $ 61.82 (June-mid 2015 high)

Lower-side levels: $ 57.04 (20-DMA), $ 56.32 (Nov 21 low), $ 56.00 (zero figure)