WTI eases below $57 on rising US oil rig count
- Rising US rig count points to higher oil output.
- WTI remains on track to close the week higher.
- OPEC Vienna meeting the key for crude oil prices.
Crude oil prices came under pressure in the late NA session on Friday, dragging the barrel of West Texas Intermediate back below the $57 handle. At the moment, the barrel of WTI is trading at $56.80, losing 0.6% on the day.
In its weekly report, General Electric Co's Baker Hughes energy services firm said that oil drillers in the U.S. added nine rigs, highest since June, in the week to November 10, lifting the total count up to 738. Since the activation of the OPEC/non-OPEC output cut agreement in January, the increasing shale production from the U.S. has been capping the gains in crude oil prices, delaying the rebalancing of the market. "Exploration and production (E&P) companies expect to increase spending on U.S. drilling and completions in 2017 by about 53 percent over what they spent in 2016, according to U.S. financial services firm Cowen & Co.," Reuters reported on Friday.
Later this month, OPEC is going to meet in Vienna to discuss whether or not they should extend the deal until the end of 2018. Markets have been pricing this possibility since early October, allowing the barrel of WTI to gain more than 7$ during that time span. Despite this late retreat, however, the barrel of WTI is still up nearly $1 on the week.
- Saudis to cut oil exports by 120,000 bpd in December - Bloomberg
Technical levels to consider
$57 (psychological level) could be seen as the initial hurdle for the WTI ahead of $57.90 (Nov. 8 high) and $59 (Jul. 1 2015 high). On the downside, supports are located at $56.40 (Nov. 8 low), $55 (psychological level) and $54 (20-DMA).