“There’s a lot of talk the [OPEC] agreement is going to be extended, but we have a full month to go before the [OPEC] talks are held,” said Gene McGillian, manager of market research at Tradition Energy. “I think the real thing is without signs the production cuts are really impacting global inventories the market has trouble holding up near the upper end of the trading range.”
As for the May contract, “some of the people who picked up contracts below $50 decided to run out ahead of expiration,” he said.
Wittner said he expects OPEC to move toward an agreement, and none of the major players have been talking down a deal lately.
Helima Croft, head of global commodities research at RBC, said Russia may be particularly interested in re-signing since it needs a higher oil price to help its economy.
“The market has a hard time sustaining itself within striking distance of the year’s highs,” McGillian said.
Kilduff said there could be some short-covering Thursday that could boost prices. But if WTI continues to break down, he said, it could go into the upper $40s. “We’ve gotten down pretty quickly to test $50 support. It’s been sticky … the big number to watch is $47. If we break that we’re going to go to $42 and touch the November lows,” he said.
McGillian said some of the geopolitical risk is also coming out of the oil price, as days go by with no further action by the U.S. against Syria. Also, the fact the U.S. ships were heading to the Indian Ocean and not North Korea, as originally reported, has brought down some of the concern about the heightened tensions between the U.S. and North Korea.
Markets on Thursday will also be watching earnings and a few economic reports, such as initial claims at 8:30 a.m. ET and the Philadelphia Fed survey, also at 8:30 a.m. ET. The leading index for March is reported at 10 a.m.
Earnings are expected from Verizon, Travelers, Blackstone, Bank of NY Mellon, Imax, MGIC Investment, KeyCorp and Danaher before the bell. After the bell, Visa and Mattel report.
Watch: Arab oil ministers discuss oil glut
