Brent oil – On the front foot ahead of US oil rig count data

Brent crude is seeing its first green candle in the week, up 0.75% or 35 cents at $45.78, after seeing a more than $4 slide in the week owing to supply concerns.

Fading prospects of production freeze

We are seeing a replay of what happened in a run up to Doha meeting in April. Major producers, after having talked up expectations of output freeze, are now hitting wires with comments that state the output freeze is unlikely.

Russia’s energy minister Novak said earlier today that the major producers are unlikely to discuss output freeze at the Algeria meeting.

Excess supply remains a issue

Wednesday’s EIA data saw a build up in the total oil demand on a YoY basis, rising for the 5th straight month. The EIA data in the week also showed that the oil supply increased by 2.3 million barrels in the week ending Aug. 26.

The rig count for the last week saw an unchanged number and markets might be eyeing something similar yet again. The immediate risk for Brent remains the rig count data release today.

Brent Technical Levels

A break above $45.90 (July 11 low) would open doors for a test of supply around $$47.56 (July 21 high). On the lower side, previous day’s low of $45.32 could offer support, which if breached would shift risk in favor of a fresh sell-off to $43.46 (Aug 11 low).