Oil price edges up as more supply cuts from Russia, Saudi Arabia loom

• Oil (WTI) price flirts with a new yearly high.
• US Dollar slips ahead of a key US jobs report. 
• Baker Hughes Oil rig count data due this Friday.

Oil prices have rallied firmly this week and could still go higher once official confirmation of more supply cuts hits the wires. Talk of the town, though still unconfirmed, is that Saudi Arabia and Russia are due to announce that they will do more in terms of supply control. Riyadh is expected to extend its 1 million barrel-per-day curb. Meanwhile, Russian Deputy Prime Minister Alexander Novak mentioned that a 300,000 barrel cut per day will be materialising this month.

This shakes up the supply side in oil, meaning that market participants need to dig deeper into their wallets. At the beginning of the week, Crude was just barely below $80, while it currently trades above $83. A new yearly high could be in reach, depending on the official announcements of both Saudi Arabia and Russia in the coming days. 

At the time of writing, Crude Oil (WTI) price trades at $83.55 per barrel and Brent Oil at $86.98.

Oil news and market movers

• The refinery outage at Garyville, Louisiana, is solved and back online.
• Shanghai weekly medium Sour Crude Stockpiles dropped by 15%.
• India refineries are dealing back with traditional suppliers as the lucrative cheap Russian oil supply looks to be abating.
• The key US jobs report, or Nonfarm Payrolls (NFP), will be released at 12:30 GMT. From all its components, some have more potential than others to affect markets. The change in the NFP is the key figure, and it is expected to decline from the previous 187K to 170K. The average MoM Hourly Earnings change, which gauges wage growth, is expected to slow down a touch from 0.4% to 0.3%. Meanwhile, the overall unemployment rate is expected to stay steady at 3.5%.
• Final confirmation from the earlier move on the back of the US Nonfarm Payrolls will come from the ISM Manufacturing PMI for August, which is expected to increase slightly from 46.4 to 47.0. Despite the rise, this would still signal a contraction in US factory activity. The Employment Index is expected to stay broadly steady from 44.4 to 44.2. The New Orders Index is forecast  to fall from 47.3 to 46.3;, and the Prices Paid Index is seen increasing from 42.6 to 43.9.
• Data from the Baker Hughes US Oil Rig Count is expected to close off this week at 17:00 GMT. The previous number was at 512, and a lower number could possibly become an 18-month low. 
• Equity markets are mixed this Friday as investors await more guidance from the US jobs report on Friday. 

Oil Technical Analysis: double top to overcome

Oil price has snapped its losing streak with a fourth consecutive day of gains this week. Crude is flirting with a new yearly high. In case supply cuts are higher than expected, with more drawdowns in strategic stockpiles in the coming weeks, Oil might be heading back to $92.

On the upside, $84.28, the high of August 10, is the one to beat in order to have that bullish breakout confirmation.  Should WTI continue to rally on the back of lower supply and more demand, not many elements could be standing in the way of reaching that blue line at $92.80. Of course, the $90 big figure psychological level needs to be faced first. 

On the downside, a temporary bottom is being formed around $77.50, which  acted as a base for this week. Should the Baker Hughes Rig Count jump substantially higher, expect to see the floor tested as more supply is bound to come online. Once bears make it through that yellow box level, expect to see more downside toward $74 before finding ample support to slow down the sell-off. 

WTI US OIL (daily chart)