WTI retreats from daily highs on rising US oil rig count, tests $58
- WTI loses traction ahead of $59, on track to end the week lower.
- American drillers add two more oil rigs this week.
- OPEC extends output cuts until the end of 2018.
Crude oil came under a fresh selling pressure with the barrel of West Texas Intermediate erasing the majority of its daily gains in the last hour following the Baker Huges rig count data. As of writing, the barrel of WTI was trading at $58.15, still up 1.3% on the day.
Reporting on the Baker Hughes' weekly data, a leading indicator of future production, "drillers added two oil rigs in the week to Dec. 1, bringing the total count up to 749, the highest since September, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday," Reuters wrote.
This reflects the U.S. producers' reaction to rising crude oil prices following Thursday’s decision by the OPEC and non-OPEC producers led by Russia to extend the 1.8 million bpd oil output cut agreement for nine more months until the end of 2018. Commenting on the possible impact of OPEC's decision, "US shale production can also respond rapidly to changing market conditions and the recent price recovery increases the probability of strong shale production growth in 2018," Fitch Ratings argued in a recent article.
Technical levels to consider
The barrel of WTI could encounter the first hurdle at $59.05 (Nov. 24 high) ahead of $60 (psychological level) and $61.50 (Jun. 22 high). On the flip side, supports could be seen at $57.01 (21-DMA), $56.30 (Nov. 21 low) and $55 (psychological level).