WTI recovers modestly from weekly lows, stays below $72

Crude oil prices fell sharply in the second half of the week and the barrel of West Texas Intermediate (WTI) touched its lowest level in a week at $71.12 on Friday. After losing nearly 5% in a two-day span, WTI is staging a modest recovery and was last seen gaining 0.45% on the day at 0.7175.

Supply dynamics weigh on oil prices

Earlier in the week, the United Arab Emirates (UAE) and Saudi Arabia reportedly reached a compromise on production levels, opening the door for OPEC+ producers to reach an agreement on output strategy. However, investors are worried that other producers will also look for privileges on production and delay a deal.

Meanwhile, the sharp increase witnessed in coronavirus delta variant infections seems to have revived worries over an unsteady recovery in the global energy demand. In its latest monthly report, OPEC left the 2021 world oil demand growth forecast unchanged at 5.95 million barrels per day. On a positive note, the organization noted that the world oil demand is forecast to reach comparable pre-pandemic levels in 2022. Nevertheless, this report failed to help oil prices regain traction.

Later in the day, Baker Hughes' weekly US Oil Rig Count data will be looked upon for fresh impetus.

Technical levels to watch for