U.S. West Texas Intermediate and international-benchmark Brent crude oil finished higher last week in a mostly lackluster trade. Both markets continued to be underpinned by a bullish outlook for demand based on reports from OPEC and the International Energy Administration, however, investors were generally disappointed that OPEC failed to extend its production cuts program.

November West Texas Intermediate crude oil futures settled at $50.66, up $0.22 or +0.44% and December Brent crude oil futures ended the week at $56.42, up $1.00 or 1.80%.

OPEC failed to reach a decision on extending its production cuts and may wait until January before deciding whether to extend their output curbs beyond the first quarter.

Russia’s energy minister said no decision was expected before January, although other ministers suggested such a decision could be taken before the end of this year.

“I believe that January is the earliest date when we can actually, credibly speak about the state of the market,” Russian Energy Minister Alexander Novak said. Other ministers suggested a decision could come this year.

In other news, according to the U.S. Energy Information Administration, U.S. stockpiles jumped the week-ending September 15 as imports and production increased, as operations resumed from the impact of Hurricane Harvey which hit the Texas Gulf Coast on August 25.

Crude inventories rose for a third straight week, building by 4.6 million barrels. Traders had priced in a 2.8 million barrel build.

Gasoline stocks fell 2.1 million barrels, in line with analysts’ expectations while distillate stocks inventories fell 5.7 million barrels, the biggest weekly draw since November 2011.

Oil services firm Baker Hughes reported that oil rigs operating in U.S. fields fell by 5 to a total of 744.

Forecast

Despite the disappointing news from OPEC, WTI crude oil remains in a position to extend the rally. It all depends on whether investors want to buy strength or a pullback into support.

A sustained move over $50.59 on the weekly chart will indicate that they are willing to buy strength. Taking out last week’s high at $51.11 will indicate the buying is getting stronger. This could trigger an acceleration into $52.42 to $52.62.

A sustained move under $50.59 will signal that investors are playing for a pullback into $48.63 to $48.04.

The drop in the rig count won’t mean anything unless it leads to a decline in production. We won’t know its effect until the U.S. Energy Information Administration releases its weekly inventories report on September 27.

This article was originally posted on FX Empire

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