The benchmark for New York-traded crude oil prices slips further away from the 13-month highs of $62.26 on Friday, after a volatile week after an unexpected arctic blast stretched deep into southern states, which took out over one-third of U.S. oil production offline.
The disruptions to supply and demand was still uncertain on Friday in the U.S., although a key obstacle to production was removed as ERCoT, the system operator for Texas’ electricity grid, said it no longer had to interrupt power supplies.
The arctic cold snap and power cuts affected more than 20 refineries in Texas, Louisiana and Oklahoma, with a combined processing capacity of over 5.5 million barrels a day.
Meanwhile, last week, U.S. energy firms cut the number of oil rigs operating for the first time since November.
The U.S. oil and gas rig count, an early indicator of future output, was unchanged at 397 in the week to Feb. 19, according to data on Friday from energy services firm Baker Hughes Co.
Despite rising for six months in a row, that combined count is still 393 rigs, or 50%, below this time last year.
However, the total count has soared since hitting a record low of 244 in August, according to Baker Hughes data going back to 1940.
U.S. oil rigs fell by one to 305 this week, while gas rigs rose one to 91, their highest since April 2020.
The decline in the oil rig count follows 12 weeks of gains, which was the longest streak of increases since June 2017.
Due to the negative technical assessment, the Relative Strength Index (RSI) 3-day ‘lookback’ indicator remains under the 50-midway point, while the Moving Average Convergence Divergence (MACD) supports a positive signal but has declined to the 0.00 axis and needs to be monitored.
The ADX indicator is trendless.
At present, the bears are still waiting for a (New York) close beneath $59.30.
If seen, this should give a bearish call to $57.00-25. Reassess from there.