- Baker Huges rig count drops to 858.
- Trade tensions are expected to weigh on oil demand.
- Compliance with OPEC supply cut agreement declines.
Crude oil prices are staging a modest recovery in the last session of the week. After the weekly report released by Baker Hughes showed a decline in the number of total oil rigs, the barrel of West Texas Intermediate stretched higher toward mid-$68s. Despite that recent movement, however, the barrel of WTI is still down more than 1.5% on the day.
"The number of rigs drilling for gas in the United States fell by 2 to 187 in the week to Jul 20, while oil-directed drilling rigs fell by 5 to 858," Baker Huges announced.
Since the sharp rally came to an end in early July, WTI has been struggling to gain traction again and is now on track to end the third week in a row in the negative territory.
Earlier this week, the OPEC meeting in Vienna revealed that the OPEC and non-OPEC producers' compliance with the output cut deal continued to decline to point to rising supply in the market. Moreover, the weekly reports released by the API and the EIA both showed increasing crude oil stocks in the United States. Additionally, the EIA announced that the production in the U.S. reached a record high of 11 million barrels per day.
In the meantime, escalating fears surrounding the Trump administration's trade policy and the retaliatory measures China and Europe are willing to take, heighten the expectations of lower demand for oil, which put extra weight on crude prices.
Technical levels to consider
The initial resistance for the WTI could be seen at $69.25 (50-DMA) ahead of $70 (psychological level) and $70.85 (Jul. 16 high). On the downside, supports are located at $67.70 (daily low), $67 (Jul. 18/Jul. 17 low) and $65.80 (May 28 low).
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