U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher early Monday amid reports of a drop in Saudi crude production in July and speculation that American shale drilling may be plateauing.
Traders are also positioning themselves ahead of an anticipated announcement from Washington due later on Monday detailing renewed U.S. sanctions against major oil exporter Iran.
According to OPEC sources, top crude exporter Saudi Arabia pumped around 10.29 million barrels per day (bpd) of crude in July, down about 200,000 bpd from a month earlier.
In other news, U.S. drillers cut two oil rigs in the week to August 3, bringing the total count down to 859, General Electric’s Baker Hughes energy services firm said on Friday.
Additionally, there are also reports that many U.S. shale oil drillers posted disappointing quarterly results in recent weeks, hit by rising operating costs, hedging losses and a drop in crude prices away from 2018 highs reached between May and July.
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Monday’s early price action suggests investors should start preparing for another week of two-sided trading.
The OPEC news about the drop in Saudi Arabian production in July was a surprise since it had pledged in June to raise output. However, Russia, the United States and the Saudi’s are still producing 10 million to 11 million bpd of crude. This represents around a third of global oil demand.
An even bigger surprise can come from Washington later today regarding the Iranian sanctions. I’m not sure that traders know what to expect from White House officials. However, it is rumored to be new sanctions on Iran.
WTI has resistance at $69.64 to $70.42 and support at $67.00 to $66.81. Brent has resistance at $75.29 to $76.22 and support at $72.33 to $70.67.