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  • Oil prices continue higher in broadly improved risk sentiment
  • OPEC is committed to doing the heavy lifting necessary to balance markets.

West Texas Intermediate crude prices were higher again on Friday, ending on Wall Street 0.82% in the green having travelled from a low of $54.84 to a high of $56.91. For October delivery, the price was 22 cents better off, or 0.4%, settle at $56.52 a barrel on the New York Mercantile Exchange after ending Thursday a few cents-per-barrel higher. WTI scored a weekly gain of 2.6%.

The prices have been held up on the back of rising risk appetite, positive trade sentiment and the algos buying the headlines, and good old supply and demand fundamentals from the rig count showing for the third week of falling domestic crude supplies. Baker Hughes showed that the number of active U.S. rigs drilling for oil declined by four to 738 this week and this followed the prior day’s the Energy Information Administration saying that U.S. crude supplies declined by 4.8 million barrels.

Crude oil markets remain range-bound amid a dichotomy

“Crude oil markets remain range-bound amid a dichotomy between demand and supply signals. Stalling trade talks continue to place a cloud on energy markets, particularly as angst grows on the prospect for demand to recover amid slumping growth signals globally,” analysts at TD Securities argued.

“In contrast, the supply side narrative remains strong as OPEC is committed to doing the heavy lifting necessary to balance markets, while Venezuelan exports slump to a sixteen year low. While next week’s JMMC meeting is unlikely to lead to a change in policy, the market continues to require OPEC to remain committed to its cuts. In this context, momentum indicators in crude will likely continue to whipsaw CTAs, but we don’t expect a major change in positioning from trend-followers for the time being.”

WTI levels

Bulls are eyeing the 60 handle while making ground above the 200-daily moving average and testing the bear’s commitments through  trendline resistance and above the 50% retracement of the July swing lows and highs. Bulls are indeed pulling well away from those treacherous territories down towards the  61.8% Fibo at 51.70.