- Baker Hughes reports a decline in active oil rig count.
- Goldman Sachs argues that oil market could be in a surplus in early 2019.
- Saudi Arabia to invest $20 billion to expand its output capacity.
Following yesterday’s deep correction, crude oil is trading in a relatively tight range on Friday and the West Texas Intermediate remains on track to end the week below $75 per barrel. As of writing, the WTI was virtually unchanged on the day at $74.65.
Earlier today, Saudi Energy Minister, Khalid al-Falih, said that Saudi Arabia was planning to invest $20 billion in the next few years to maintain and possibly expand its oil production capacity. Although this announcement weighed on crude oil prices, market reaction stayed relatively limited as investors remain focused on the U.S. sanctions on Iran’s oil imports, which is scheduled to come into effect in early November.
Meanwhile, Goldman Sachs argued that there could be a surplus in the oil market in early 2019. “While upside price risks will prevail for now, fundamental data outside of Iran has not turned bullish in our view. We expect fundamentals to gradually become binding by early 2019 as new spare capacity comes online… pointing to the global market eventually returning into a modest surplus in early 2019,” Goldman Sachs said to its clients, as reported by Reuters.
On the other hand, the weekly report published by Baker Hughes Energy Services showed that the number of active oil rigs in the U.S. declined to 861 from 863 a week ago.
Technical levels to consider
On the upside, $75 (psychological level) could be seen as the first resistance ahead of $75.90 (Oct. 2 high) and $76.90 (Oct. 3 high). Supports, on the other hand, could be seen at $73.85 (daily low), $72.90 (Oct. 1 low) and $71.70 (20-DMA).
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