WTI extends gains above $73 after Baker Hughes reports decline in number of oil rigs

Oil rig count in the U.S. fell to 863.
ARAMCO announces output boost to counter lower supply from Iran.

Eren Sengezer FXStreet

After spending the last three days consolidating in a relatively tight range, crude oil prices gained traction on Friday and the barrel of West Texas Intermediate rose to its highest level since July 11 at $73.70. The weekly report published by Baker Hughes energy services revealed that the total number of active oil rigs in the United States declined to 863 to provide a late boost to the WTI.

"For the third quarter, the increase of five oil rigs was the smallest since drillers cut three rigs in the fourth quarter of 2017. They added 50 rigs in the first quarter and 61 rigs in the second quarter of 2018," Reuters noted.

Earlier in the day, Saudi’s oil giant, ARAMCO, announce that it would boost its oil output by 600K barrels per day to make up for the negative impact of the U.S. sanctions on Iran's supply. Although this news dragged the barrel of WTI below the $72 mark earlier in the day, it didn't take for crude oil to reverse its course as investors are looking to reposition themselves in the last day of the quarter ahead of November 4, on which U.S. sanctions against Iran go into effect.

“The market is coming to grips with the fact that the Iranian sanctions are not that far away. It’s going to tighten the market,” Phil Flynn, an analyst at Price Futures Group in Chicago, told Reuters on Friday.

Technical levels to consider

The initial resistance for the WTI aligns at $74.25 (Jul. 11 high) ahead of $75.25 (2018 high) and $76 (psychological level). On the downside, supports could be seen at $72 (psychological level/daily low), $70.80 (Sep. 24 low) and $70 (20-DMA).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

EUR/USD retreats toward 1.1600 after upbeat US data

EUR/USD pulls away from session highs and declines toward 1.1600 in the American session on Wednesday. Upbeat private sector employment and ISM Services PMI data from the US help the US Dollar (USD) stay resilient against its rivals, limiting the pair's upside.

GBP/USD meets resistance around 1.3400

In line with its risk-linked peers, GBP/USD stages a modest comeback on Wednesday, although meeting some resistance around the 1.3400 neighbourhood. Cable’s humble recovery struggles to gather momentum as the Greenback benefits from better-than-forecast macroeconomic data releases.

Gold loses traction after testing $5,200

Gold corrects lower after testing $5,200 but manages to stay in positive territory in the second hald of the day on Wednesday. The precious metal remains well supported by the deterioration of the geopolitical scenario in the Middle East, while the US Dollar's resilience caps the upside.