Faces stiff hurdles around $72.00 as OPEC output to remain steady

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• The oil price has faced selling interest after a recovery move to near $72.00 as OPEC is not expected to cut its overall output ahead.
• Continuous negotiations over US debt-ceiling issues indicate that a bipartisan will be there before the US Treasury meeting default.
• The oil price is at a make or a break level near the upward-sloping trendline plotted from May 04 low at $67.47.s

West Texas Intermediate (WTI), futures on NYMEX, have faced tough barricades after a recovery attempt to near $72.00 in the early Asian session. The oil price is anticipated to resume its downside journey further as OPEC is not expected to cut its overall output further in its next meeting on June 04.

Russian Deputy Prime Minister Alexander Novak said he expected no new steps from OPEC+ at its meeting on June 4. Contrary to that, Saudi Energy Minister Abdulaziz bin Salman had hinted at the possibility of another round of production cuts at the meeting.

The US Dollar Index (DXY) has corrected to near 104.21 as continuous negotiations between the White House and Republican leaders are indicating that a bipartisan will be there before the US Treasury meeting deadline of default.

A responsive selling action dragged the oil price sharply after it failed to sustain above the 50% Fibonacci retracement (plotted from April 12 high at $83.40 to May 03 low at $64.31) at $73.94 on a four-hour scale. Also, the 200-period Exponential Moving Average (EMA) at $73.72 acted as a barrier for the oil bulls.

The oil price is at a make or a break level near the upward-sloping trendline plotted from May 04 low at $67.47.

A slippage into the bearish range of 20.00-40.00 by the Relative Strength Index (RSI) (14) will trigger the downside momentum.

Going forward, a downside move below May 25 low at $71.03 will weigh heavily on the oil price and will drag it toward the crucial support at $70.00 followed by the 23.6% Fibo retracement at $68.88.

In an alternate scenario, a solid recovery above the 50% Fibo retracement at $73.94 will drive the asset toward a 61.8% Fibo retracement at $$76.16. Further recovery above the latter would expose the oil price to April 26 high at $77.86.

WTI four-hour chart