Oil prices ended the week on a strong uptick for the third weekly gain in a row. Last week the complex garnered support from a bullish weekly EIA oil inventory report that showed across the board draws in all the major oil products sending total combined stocks of crude oil and refined product to 168.8 million bbls below the high hit in Feb of 2017.

OPEC’s goal of pushing global oil inventories to the five -year average is working as total US stocks are now only 17.8 million bbls above the five-year average even with US crude oil production setting record highs on a weekly basis. Last week the externals were a mixed picture for oil with global equities getting hit with a significant wave of selling while the US dollar was lower versus most major currency pairs.

The correlation between oil and equities plummeted sending the 10-day moving average correlation to an inverse relationship (atypical) and thus resulting in the market ignoring this relationship. On the other hand, the inverse relationship (typical) between oil and the US dollar widened strongly and providing a modest degree of support for oil prices.

A negative data point hit the media airwaves late Friday afternoon in the latest Baker Hughes data reporting the number of rigs deployed to the US oil sector increased on the week (by 4 rigs) after increasing during the previous week. The latest rig data still supports the overall uptrend in the US oil rig count remains.

Total rigs deployed to the oil sector are higher by 152 or 23.3 percent year over year. As shown in the following chart oil rigs increased with US crude oil production increasing last week. US crude oil production continues in an uptrend setting new record highs on a weekly basis.

Total US crude oil production is about 14 percent above where it was for the same week a year ago. This week’s production came in at 10.407 million bpd.