Worries over increased global supply are likely to weigh on oil in the week ahead, after prices logged their third straight weekly loss amid emerging evidence of oversupply, despite Saudi Arabia's pledge to hold off flooding the market with crude.
Saudi Arabia's OPEC Governor Adeeb Al-Aama said in a statement Thursday that the kingdom expects crude exports to fall by about 100,000 barrels per day (bpd) in August as it limits excess production.
He added that concerns the oil cartel and its allies could oversupply the market with more output are “without basis."
Those comments came after OPEC figures released earlier this month showed Saudi output in June rose to levels not seen since 2016. The world's top oil exporter and OPEC's biggest producer pledged last month it would raise output to make up for lost supplies out of Libya, Venezuela and Iran.
Fresh weekly data on U.S. commercial crude inventories on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer and how fast output levels will continue to rise will capture the market's attention.
U.S. oil production reached 11 million bpd for the first time last week. The country has added nearly 1 million bpd in production since November, thanks to rapid increases in shale drilling.
However, the U.S. rig count, an early indicator of future output, fell by 5 to 858 last week, according to oilfield services firm Baker Hughes. The rate of growth has slowed over the past month or so with a decline in crude prices from late May through late June.
The rig count is still up 94 from a year ago, when there were 764 rigs.
The technical price is retained in the upside trend channel, receiving support from short-term horizons, boosted by 23.6% Fibonacci correction of the main trend. Considering the negative foundation, it is possible to observe short-term downward impulses targeting the basic diagonal. In addition, Sequential has a 9-point downside and forms an arrow, also below - a likely ending of the downward movement and the likelihood of a new one in the direction of the trend.
A breakthrough in the support zone will lead to more massive sales, and in this scenario, we will probably see a 200-year test. We are waiting for news about the major oil producers that will move both the oil price and the energy companies traded on the stock exchange.
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