As Baker Hughes reported a decline in US oil rig count by 5 rigs to 763 this week, oil price jumped by more than 3 percent closing the week higher than where it started on Monday.
The critical line right now is $50/bbl, a sustained price level above it drives US oil rig count and production up, which after a while leads to a fall in oil price. And a sharp fall below that level pressures OPEC members who in turn start to give more assurance to the oil market for the sake of driving oil price back above $50/bbl.
Oil Price Bottomline:
Given the resistance of oil price to go above $53/bbl, or to fall and remain below $45/bbl for sometime, the best level for oil price seems to be around $48/bbl. It is still a reasonable level and it will slow down drilling activities in the US and in turns limit the production growth.
