Oil prices stabilize into Friday's close on a fifth week of drilling declines
|- WTI ended the day higher by 1.27% having travelled between a range of $54.17 and $56.03.
- Futures were recovering part of the hefty 7.9% drop from Thursday, suffering a 1% weekly loss.
WTI ended the day higher by 1.27% having travelled between a range of $54.17 and $56.03 as markets shrugged off the trade spat, for now, but volatility is bound to remain high as we await retaliation measures form the Chinese.
However, for Friday, markets got back to data with US numbers showing another week of rig drilling declines in the industry. For a fifth week running, the number of U.S. rigs shown by Baker Hughes drilling dropped by 6 to 770 this week.
As for futures WTI crude for September delivery added $1.71, or 3.2%, to settle at $55.66 a barrel on the New York Mercantile Exchange, recovering part of the hefty 7.9% drop from Thursday, suffering a 1% weekly loss.
Analyst at TD Securities explained that the weak technical picture added fuel to the flames as growing concerns over the viability of demand growth ultimately sent prices sharply lower. "That being said, a constructive supply side which continues to pump out a positive narrative should keep prices from falling much further. However, unless Brent prices manage to close north of the $61.60/bbl, CTAs could add to downside pressure as momentum signals point to more pain for the bulls."
As for US data, the Nonfarm payrolls matched expectations, posting a 164k gain in July as wage growth remains a non-issue for inflation. "With the FOMC largely focusing on the external factors affecting the outlook, we don't see enough evidence here to move the Fed either way in the near term. We continue to believe the Fed will deliver 25bp cuts in September and October as global growth fears remain present," analysts at TD Securities also explained.
WTI levels
Technically, the price is now below the daily moving averages and the 61.8% Fibo retracement of the June to mid-July swing lows and highs but has crept up to test the 56 handle and is approaching the 38.20% Fibo of the recent swing highs and lows. On the flipside, Bears can target the 50 handle on an escalation of the trade wars, but closer to price action, the 52 handle falls in as a key support area.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.