WTI struggles to stick to recovery gains, drops toward $68 after Baker Hughes report

• Drillers in the U.S. add three rigs last week.
• Russia’s Novak says that there are no discussions to raise output by more than 1 million bpd.
• Easing trade tensions provide a modest boost to crude prices this week.

After losing nearly $8 since it rose above the $75 mark in early July, the barrel of West Texas Intermediate struggled to make a decisive recovery this week as it found a short-term resistance near $70 on Thursday. On Friday, WTI came back under pressure and erased the majority of its weekly gains and renewed  its daily low at $68.25. As of writing, WTI was trading at $68.60, where it was still down 1.35% on the day.

The weekly report released by Baker Hughes showed that oil drillers in the U.S. added three rigs in the previous week to lift the total number up to 861 to suggest higher production levels in the U.S.  “The U.S. rig count, an early indicator of future output, is higher than a year ago when 766 rigs were active as energy companies have been ramping up production in anticipation of higher prices in 2018 than previous years,” Reuters reported.  

Earlier in the day, Russian energy minister Alexander Novak said that OPEC and its allies were not discussing to ramp up the production by more than 1 million barrels per day to provide a short-term boost to crude oil prices.  

On the other hand, easing concerns over a global trade war after optimistic announcements from US President Trump and EC President Juncker, helped the WTI shake off the bearish pressure. If the WTI settles near the levels where it’s trading right now, it will snap the 3-week losing streak.

Technical levels to consider

The initial support for the WTI aligns at $67.85 (20-WMA), $67 (Jul. 17/Jul. 18 low), and $65.80 (May. 28 low).  On the upside, resistances could be seen at $70 (psychological level/daily high/Jul. 19 high), $70.80 (20-DMA) and $71.65 (Jul. 13 high).