WTI oil hits session highs above $42.40 after Baker Hughes report

Front-month WTI futures extended their rebound from session lows at $41.65, to return above $42.00 after Baker Hughes reported the first decline on US oil drills in more than two months.

Oil prices appreciate as US rigs drop

Baker Hughes has reported that the active US rigs drilling for oil declined by 5 in the week of November 13 to a total number of 231. This is the first time oil rigs post a negative reading since mid-September and has been welcomed by a market concerned about oversupply amid the grim outlook for global demand on the back of coronavirus lockdowns.

The price of the West Texas Intermediate barrel has appreciated more than $0.40 after the release of the report to hit session highs beyond $42.40. The risk-on sentiment triggered by the announcement of Drugmaker Pfizer about their plan to request an emergency-use authorization for their vaccine has been supportive for oil prices, pushing WTI higher for the third consecutive day.

From a wider perspective, however, WTI prices remain within previous ranges, roughly between $40 and $43. The market remains cautious as the OPEC debates the plan to taper the current output cuts, with all eyes on the November 30 meeting where the worlds’ mail producers are expected to come up with a specific program.

Technically speaking, the pair has reached intra-week highs at $42.40 where bulls might find resistance. If that level is breached, the next target would be $43 (November 11 high) and late August highs at $43.80. On the downside,, immediate support lies at $41.60 intraday lows, and below there, $41 (November 18 low) and below here, at  $40 (psychological level and November 13, 16 lows).

Technical levels to watch