Crude oil prices edged at two-week lows on Friday as investors fled riskier assets amid growing U.S.-China trade worries, while U.S. oil rig counts moved to a three-year high adding to downside momentum. Crude oil prices continued losses following data from energy services firm Baker Hughes showing the number of oil rigs operating in the US rose by 10 to 808, the highest level since March 27, 2015.
According to data Wednesday from the Energy Information Administration, rising U.S. output, climbed for a sixth straight week to 10.46 million barrels a day. For second consecutive week in a row, NYMEX oil prices have been declining with WTI negative by 4.4 percent while MCX oil prices also declined around 5 percent.
Oil has received support from a turnaround in the U.S. stock market and a Reuters survey showing OPEC oil output fell in March to an 11- month low due to declining Angolan exports, Libyan outages and a further slide in Venezuelan output. However, the confident mood in the oil market has been tempered by U.S. crude production, which climbed to a record 10.4 million barrels per day last week, putting U.S. output ahead of Saudi Arabia and closing in on Russia’s 11 million bpd.
Crude oil daily chart has formed “Rising wedge” pattern. The last session ended up bearish in trend near the channel’s support slope line. The market is expected to retest a key support holding at 4025 and turn bullish. The upside rally could test all the way through 4080-4125 levels in the upcoming sessions. Alternatively, if the market breaks below the key support then it might turn bearish. The downside rally could test 3985- 3950 levels. Key resistance holds at 4125. We expect oil prices to trade sideways today as renewed global trade worries are bothering investors while increasing oil inventories and production in the US is a cause of concern.
On the MCX, oil prices are expected to trade sideways today, international markets are trading higher by 0.4 percent at $62.3 a barrel.