Cuts Supporting Oil Prices

Crude oil prices are rising into the end of the week with crude futures once again testing the 72.61 level. Fresh production cuts from Saudi Arabia and Russia at the start of the week have started to filter into bullish sentiment in the market. With cuts from the two producers totalling around 1.5% of global daily supply, crude has risen steadily through the week.

OPEC Looking to Expand

Haitham al-Ghais, secretary-general of OPEC, said this week that the group is looking to take on new members. Al-Ghais said that he had been in talks with several producer such as Mexico, Brunei, Azerbaijan and others. The news signals a desire from the group to gain greater control of the global oil market likely in response to the soaring production levels in the US.

EIA Reports Inventories Drawdown

Crude prices were also helped this week by a bullish report from the Energy Information Administration. The EIA reported a drawdown in crude inventories, which fell by 1.5 million barrels, though this was a little below the 2 million barrel deficit the market was looking for. However, the report was bolstered by news of a drawdown in gasoline inventories too, signs that the summer driving season demand is kicking in.

NFP On Watch

Looking ahead, whether crude can break higher here will likely depend on how USD reacts to the latest jobs data today. Any weakness should help propel crude through resistance while fresh USD strength should see crude turn lower.

Technical Views

Crude

Crude prices are once again testing the 72.61 level range highs, with the bearish trend line sitting on top of price there also. If bulls can break here, focus will shift to the bigger 82.59 level next.