Baker Hughes reported that the weekly oil rig count fell. Should I buy Crude Oil?

The price of crude oil continues to trade very close to the $70 resistance level after Baker Hughes reported that the weekly rig count fell this week.

Energy services firm Baker Hughes reported on Friday that the U.S. oil rig count decreased by 16 to 394, but it is important to say that a year earlier, the U.S. had 181 rigs in operation. U.S. crude inventories fell more than anticipated, and according to Energy Information Administration, crude inventories dropped by 7.2 million barrels for the week ended on August 27.

The slowdown in U.S. jobs growth raised questions about the pace of the economic recovery and negatively influenced crude oil price even as much of the supply from the Gulf of Mexico remains shut-in following Hurricane Ida’s path through the region last week. Hurricane Ida has shut about 80% of the Gulf of Mexico’s oil and gas output, while oil refineries in Louisiana could take weeks to restart.

Despite this, the Organization of the Petroleum Exporting Countries added 0.4-million barrels per day of additional supply last week and announced that the oil demand should increase in 2022 to levels seen before the pandemic.

“With the near-term OPEC+ catalyst out of the way, the focus shifts again to the shape of the demand recovery, with some concern that it will be challenging to keep the market in deficit next year if OPEC+ continues to add supply at the anticipated 400,000 bpd pace,” said Stephen Innes, managing partner at SPI Asset Management.

Investors will continue to pay attention to the OPEC+ commentaries looking for any clues, but surging COVID-19 cases could hit demand for crude oil again. Delta variant of the coronavirus, together with further new variants, especially ones that might not be stopped by existing vaccines, still poses downside risks to the recovery.

Those whose interest is to invest in commodities like oil should consider that there is still not a clear trend for the upcoming weeks.

Crude oil has weakened from its recent highs registered in August, and if the price falls below $65 support, it would be a firm “sell” signal. The next target could be around $60 support, but if the price jumps above $73, it would be a signal to buy crude oil, and we have the open way to $75.

Energy services firm Baker Hughes reported on Friday that the U.S. oil rig count decreased by 16 to 394, but investors will continue to pay attention to the OPEC+ commentaries looking for any clues. The Organization of the Petroleum Exporting Countries added 0.4-million barrels per day of additional supply last week, but the global COVID-19 pandemic continues to pose downside risks to the recovery.

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