WTI eyes the $75 critical level

• WTI consolidates the overnight bid as nulls eye the $75 level for the sessions ahead. 
• Inventories data, demand and the OPEC meeting next week are driving the bid. 

Oil prices are flat in Asia with bulls resting below the recent highs made overnight when a larger than expected drop in US oil inventories proved that demand is continuing to improve. 

On a spot basis, WTI was 0.25% higher by the closing bell at $73.24, ending below the highs of $74.22 and up from the lows of $72.84.

In Asia, the price is trading at $73.23, slightly below the high of the session at $73.31.

The Energy Information Administration reported US oil inventories fell by 7.6-million barrels last week, well above the 4.3-million-barrel drop expected. Gasoline inventories were also lower, falling 2.9 million barrels. 

''This was the fifth weekly fall in inventories and pegs the commercial crude oil stockpile at 459.1mbbls, the lowest level since March 2020,'' analysts at ANZ bank explained. 

''Gasoline inventories were also weaker, as the driving season pushes demand higher. The large drawdown highlights how tight the market is; however, the lack of supply response is also having an impact.''

In the background, OPEC+ group is expected to limit supply as they sit on more than 7-million barrels per day of unused capacity at the same time while negotiations with Iran continue to linger.

An OPEC+ meeting next week will be closely watched by traders as the group is expected to decide on its August production levels in order to ease global deficits expected in coming months.

''More cautious members are debating whether any increase in production should be pushed to August instead, which would open the door to higher prices in the near-term,'' analysts at TD Securities explained.

''Notwithstanding, oil inventories should soon reach the critical benchmarks set by the 2015-19 average levels by July, which should prompt OPEC+ to ramp up the pace on the unwind of their deal. In this scenario, the breakout north of $70/bbl may not be sustainable, but the cautious plan would see the Summer Breakout continuing to play out in the near-term.''

WTI technical analysis

The $75 target is in focus.

The daily chart shows that the price is steadily approaching the target following a significant retracement to prior resistance structure.

With the price closing above the prior day’s close once again, the focus is on the upside for the forthcoming sessions.