Oil: WTI bulls capped at session high, testing back towards 4hr 55 sma

WTI was capped at 52.70 the high from a low of 51.46 having taken out the 4hr 55 sma at 51.98 and just below that psychological 52.0 handle. 

WTI dropped overnight and as trading at the lows in the US session on the back of further concerns over an increase in U.S. crude production. Saudi Arabia’s energy minister, Khalid al-Falih, recently explained that the confidence in a major international deal to cut crude output has already started to drain the market of excess supply. 

However, data from industry group Baker Hughes BHI, -1.16%  released Friday shows the number of working oil rigs in the U.S. climbed by 29 in the week ended January the 20th to a total of 55. As such, markets expect a potential rise in oil production that could continue to weigh on the price of oil. However, OPEC officials, OPEC and 11 non-OPEC producers have said that they have already cut 1.5 million barrels a day from the global oil market, over 80% of the amount pledged. Markets are still awaiting official data in an environment of high production and we will have to wait until the official OPEC January production data that will not be released until mid-February.

WTI levels

In respect to levels, to the downside, 50.00 is the psychlogical support while a move towards 54.52 would be bullish for a break of the start of the year highs. The 4hr 55 sma is near term support guarding 51.30/60 territory and 50.35 this year's low after there as the Dec 9th bullish gap.