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  • Oil extends rally after OPEC agreed to increase output but more modestly than expectations.
  • WTI up by 5% on Friday, at 4-week high, rebounds more than 8% from Monday’s low.

Crude oil prices are rising sharply, extending weekly gains. WTI Futures reached $69.00, the highest level since May 25 and is up almost $5 over the week.

The rally accelerated after the OPEC agreed to increase output by around 600K barrels a day. “The aim of the deal is to return total compliance to the current output agreement to 100%. Compliance has been well above 100% this year since some countries, notably Venezuela, have seen a drop in production. OPEC is set to hold the next biannual meeting on 3 December”, wrote analysts at Danske Bank.

The increase is in order to maintain the current production agreement that will last until the end of 2018 and explains why prices moved higher.

Regarding data, the Baker Hughes Oil Rig Count report showed an increase in the US to 863 from 862 and decline in gas from 194 to 188.
 
WTI Levels to watch

The current rally was capped by the $69.00 area that has become the immediate resistance followed by $69.50 (Apr 19 high) and $70.20 (May 14 low). On the flip side, supports might now be located at $68.60 (May 30 low), $67.20 and $66.50.