WTI erases majority of daily gains, closes in on $48

• WTI turned south after climbing higher toward $40.
• OPEC+ is expected to keep oil output steady.

Crude oil prices surged higher on the first trading day of 2021 and the barrel of West Texas Intermediate (WTI) touched its highest level in more than 10 months at $49.80. However, the WTI reversed its direction ahead of the American session and last seen posting small daily gains at $48.25.

Eyes on OPEC

Reports suggesting that OPEC and non-OPEC producers are likely to keep the oil output unchanged despite the fact that Russia has been advocating for 500,000 barrels per day (bpd) increase in February, helped oil push higher on Monday.

In December, producers have agreed to ramp up the output by 500,000 bpd in January but renewed concerns over the negative impact of rising coronavirus infections on energy demand seem to be forcing producers to take a cautious stance.

Earlier in the day, British Prime Minister Boris Johnson noted that they will have to take additional measure to limit the spread of the new coronavirus. Furthermore, Germany will reportedly extend the current lockdown for two weeks, until the end of January. 

On Sunday, OPEC Secretary-General Mohammad Barkindo said that they are expecting the global crude oil demand to rise by 5.9 million bpd in 2021 to 95.9 million bpd. Investors are waiting for the statement that will come out of the OPEC+ meeting later in the day.

Technical levels to watch for