- Global demand outlook drags crude oil lower this week.
- Total number of active oil rigs in the U.S. increase by 8.
- Hurricane Michael weighs on Gulf of Mexico oil output.
Crude oil prices recorded modest gains on Friday and the barrel of West Texas Intermediate settled around 40 cents higher at $71.34. Despite that unimpressive recovery, the barrel of WTI lost $3 this week.
Earlier in the day, the International Energy Agency (IEA) announced that it cut its forecast for demand for OPEC crude oil in 2018 and 2019 by 0.3 mbpd to 32.0 and 31.6 mbpd, respectively. Additionally, the IEA also lowered its global oil demand growth estimate for 2018 and 2019 by 0.11 million barrels per day (mbpd) to 1.28 mbpd and 1.36 mbpd respectively. Commenting on the report, “The weaker outlook has gotten a raised profile in the market, but there’s potential for a real supply crunch toward the end of this year. The demand outlook is hurt right now because of the situation with the U.S. and China in particular,” John Kilduff, a partner at Again Capital Management in New York, told Reuters.
Although reports of Hurricane Michael causing a 40% drop in the oil output of the Gulf of Mexico helped crude oil prices erase a small part of this week’s losses, refineries are expected to return to full capacity soon. Furthermore, today’s data released by Baker Hughes showed that the number of active oil rigs in the U.S. rose to 869 from 861 recorded in the previous week.
Technical levels to consider
The initial support for the WTI aligns at $70.60 (daily low) ahead of $70 (psychological level/50-DMA) and $69.05 (Sep. 4 low). On the upside, resistances could be seen at $72.60 (20-DMA), $73.70 (Sep. 28 high) and $75 (Oct. 10 high/psychological level).
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