WTI drops back below $ 56 ahead of OPEC meeting

• Oil pares gains as US-China trade optimism-led risk-on cool-off.
• Focus on US-Iran geopolitical tensions and OPEC meeting for fresh direction.

Having witnessed a volatile session on Wednesday, WTI (futures on Nymex) attempted a minor recovery from three-day lows of $ 55.62 on Thursday.

However, the black gold lacked follow-through on the 56 handle, as markets turned cautious ahead of the key OPEC Joint Ministerial Monitoring Committee (JMMC) due later today.

US-China trade optimism offset by OPEC meeting nervousness

The barrel of WTI saw a steady recovery mode in the Asian trades after the risk sentiment was boosted on fresh US-China trade optimism, spurred by the goodwill trade gestures from both the US and China. The US President Trump delayed tariffs on Chinese good by two weeks in response to China’s exemptions of 16 US products from its tariffs list.

However, the recovery stalled in Europe, as the sellers returned amid expectations that the US could ease its stance on Iran, a move that would potentially boost global crude supply at a time of rising concerns about oil demand, as underscored by the latest OPEC monthly oil market report.

Meanwhile, increased nervousness heading into the key OPEC+ meeting on the output policy and oil market keeps the bulls on the edge. Despite the latest downtick, the prices are likely to find support from declining US crude stockpiles.

The US Energy Information Administration (EIA) revealed that the US crude oil stockpiles fell last week to the lowest in nearly a year to 416.1 million barrels, down 6.9 million barrels in the week to Sept. 6.

All eyes remain on the fresh developments surrounding the US-Iran geopolitical conflict and US-China trade front for fresh trading impetus ahead of the OPEC meeting outcome.

WTI Levels to watch