WTI at critical juncture as bulls fight for $60 and bears for $40

WTI is currently trading at a critical point where both bulls and bears are fighting to take a lead. At one hand, we have reports from both Organization of Petroleum Exporting Countries (OPEC) and International Energy administration (IEA) raised the possibility of the oil market returning to balance in second half of the year and recent outages in countries like Nigeria, Iraq, Canada, and Libya diminishing on the other. Especially oil production in Canada and Brazil resuming fast. In addition to that decline in the crude oil production in the United States has slowed in recent days with operating rigs recovering.

Oil is recovering since it suffered a major setback last week due to fear arising from the prospect of a British exit from the European Union but yet to recover fully. Recent high around $51.5 per barrel remains critical.

If that level isn’t breached oil is more likely to decline in the near future and reach $40 per barrel, whereas any breach will first target $57 per barrel and then to $60 per barrel. British referendum will be a key determinant in deciding the direction.