Oil rises on signs of lower US output

WTI surged more than 1% on Friday and found resistance near $81.30, above the 20-day SMA. US Oil and natural rigs decreased for the sixth week in a row.

The USD trading neutral allowed the black gold to gain traction. Chinese financial woes may limit the WTI’s upwards momentum.

At the end of the week, WTI rose above $81.30, seeing more than 1% gains. The US reported on Friday that the weekly Baker Hughes Rig Counts decreased to 520 from the previous 525 in the week ending on August 18.

These figures are pointing at a slump in US Oil production which could exacerbate the global supply tightness, driving the price to the upside.

The rising potential for WTI may be constrained by China’s precarious economic state. The Chinese real estate behemoth Evergrande filed for bankruptcy protection on Thursday in a US court, which caused market gloom over concerns of a potential global contagion.

A poor Chinese economy would reduce the demand for energy and so impede the rise of the WTI. China is the world’s largest importer of oil.