Oil prices edged higher on Friday but dropped on Monday morning as investors react to the latest rise in the U.S. rig count which indicated to a further rise in U.S. production.
Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers said: “The largest concern for investors currently remains the rise in the U.S. rig count, which could potentially jeopardize the OPEC and Russian agreement when they meet for a review in June 2018.”
According to Baker Hughes, energy services firm said on Friday, The amount of rigs drilling for new oil production in the U.S. rose by two in the week to Dec.8, to 751, the highest level since September.
A higher rig count indicates further increase in production. It has already increased by more than 15 percent since mid-2016 to 9.71 million barrels per day (bpd), the highest level since the early 1970s, and close to levels from top producers Russia and Saudi Arabia.
Crude Oil Daily chart has formed a “Rising wedge” pattern. The trend remains bullish as prices retested the interim support line.
As per the technical aspects of the pattern, the retest is expected to push the market furthermore and the rally could test $58-$58.50 levels in the upcoming sessions. Resistance holds at $59 and Support holds at $56.
This article was originally posted on FX Empire
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