Brent oil retreats on excess supply concerns

Brent oil failed to capitalize on the Friday’s rebound from a technical support and was trading lower around $46.45, down by 0.38 cents or 0.81% at the time of writing.

Deja Vu

The OPEC members are set to meet in the end of the September for informal talks at an energy conference in Algeria. The events in the run up to the meeting suggests this the whole thing is likely to be a Déjà vu of Doha debacle. A couple of weeks back markets did consider the possibility of production freeze. However, the expectations are quite low now.

US oil rig count continues to rise

The Baker Hughes rig count released on Friday pointed to another minor rise in the in drilling activity in the US. This does not go down well with oil traders worried about excess supply situation.The data showed the number of rigs drilling for oil in the U.S. last week rose by 1 to 407, marking the ninth increase in 10 weeks.

Brent Technical Levels

Brent oil sees immediate resistance at $46.44 (200 MA on 4 hourly chart). A violation there would open up upside towards $47.25 (25 MA on 4 hourly chart), and then $47.60 (100 DMA).

On the other hand, immediate support is around $45.58 (channel support), under which prices could test support at $45.30 (Sep 1st low) and $43.75 (Aug 10 low).