The crude oil prices are rising in the last day of the week amid the expectation that OPEC and Russia will negotiate some form of quota deal next week while the US supply on the markets rises significantly. The futures on US crude oil WTI rose by 0.15 USD, or 0.10%, to 51.30 USD per barrel, while Brent variety increases by 0.50 USD, or 0.76%, to 59.77 USD per barrel.
Despite rising prices, the crude oil has lost almost a third of its value since the beginning of October due to the rising surplus after global production growth.
“Short-term oversupply hit Brent’s prices”, according to the investment bank Jefferies, adding that “it is increasingly urgent for oil to go into storage”.
This is also reflected in the Brent curve on forward contracts where the prices of future deliveries are higher than those for immediate sale.
In order to limit oversupply, OPEC and its main partner Russia are coming close to an agreement to further reduce yields. The OPEC+ Group will meet in Vienna on December 6-7 to discuss its production strategy and how to stimulate price growth, preventing a situation similar to 2014, when prices collapsed to 30 USD per barrel.
Before that, however, the three largest producer countries – the US, Russia and Saudi Arabia – will be part of the G20 meeting in Argentina, which starts today.
US oil stockpiles
The Energy Information Administration said oil inventories rose by 3.6 million barrels, marking the 10th straight increase. Gasoline stockpiles fell by 800,000 barrels. Weekly production was flat at 11.7 million barrels per day.
The analysts expected US crude stockpiles to fall by 430,000 barrels and gasoline stockpiles to rise by 141,000 barrels.
Late Tuesday, the American Petroleum Institute, an industry group, reported a 3.45 million-barrel increase in crude stockpiles. But gasoline stockpiles fell by 2.62 million barrels.
The EIA’s estimates for US production for the week ending November 23 continues to weigh on prices, averaging 11.7 million barrels per day for the third week in a row and the highest production rate for the United States.
Oil rigs count
Baker Hughes reported a 3-rig decrease for oil and gas in the United States this week. The total number of active oil and gas drilling rigs now stands at 1,076 according to the report, with the number of active oil rigs increasing by 2 to reach 887 and the number of gas rigs falling by 5 at 189.
The oil and gas rig count is now 147 up from this time last year, 138 of which is in oil rigs.
Canada’s oil and gas rigs for the week decreased by 5 rigs this week after gaining 7 rigs last week, bringing its total oil and gas rig count to 199, which is 23 fewer rigs than this time last year, with a 5-rig decrease for oil rigs, and the number of gas rigs holding steady for the week.
Oil price technical analysis
The WTI crude oil market has formed a bit of an inverted hammer, or perhaps a shooting star sitting on top of the 50 USD level. At this point, if we can break above the top of the candle stick that would be a very bullish sign and should send this market towards the 55 USD level next. Alternately, if we break down below the bottom of the candle stick the market can go much lower, perhaps reaching towards the 45 USD handle after.
Brent markets rallied initially during the week but struggled to stay above the 60 USD level to form an inverted hammer. I think that the market could break down to the 55 USD level, perhaps down to the 50 USD level after that. Alternately, if we break above the top of that inverted hammer, then we could reach towards the 65 USD level, perhaps even the 67.50 USD level.