In recent weeks, it was hard to avoid the topic of crude oil, turning on the TV or opening a newspaper. Developments in the Middle East, escalating tensions between Saudi Arabia and Iran, the upcoming meeting of OPEC and non-OPEC ministers as well as the Baker Hughes reports, crude oil and its products inventories were mainly in the interest of investors.

Since our last Oil Investment Update, light crude extended gains and hit fresh 2017 highs. Black gold’s rally, which began in early October, has been mainly driven by growing indications that the crude market was finally starting to rebalance and hopes that the OPEC cuts agreement would be extended beyond March 2018.

Thanks to these circumstances, the price of the commodity almost touched the level of $58, which increased the probability of the test of the barrier of $60 in the previous week. Despite geopolitical tensions, which usually support the price of black gold, light crude stopped its rally after an unexpected increase in crude oil inventories. Additionally, Friday Baker Hughes report showed that the number of oil rigs operating in the U.S. rose by 9 to 738, which was the highest level in almost a month.

And speaking of the drilling activity… As you remember, in May, OPEC producers agreed to extend production cuts until March 2018, but (…) What happened with the number of oil rigs operating in the U.S. since then? They increased from 703 in May to 768 in August. Although we saw “declines” in the following weeks, the last week’s rebound raised worries amid investors that the U.S. oil producers are preparing to increase the output levels further and pushed the price of light crude lower.

Will we see further declines and a comeback to the barrier of $50 in the following week(s)? Or maybe oil bulls will stop their opponents and test the level of $60? Is it possible that the relationship between crude oil and gold will give us clues about black gold future moves? Let’s jump right into the charts (charts courtesy of http://stockcharts.com) and try to find out what can we expect in the coming weeks.