WTI retreats from daily highs on Baker Hughes data, looks to settle below $70

• WTI remains on track to close second straight week lower.
• Demand outlook stays as the primary catalyst.
• Weekly Baker Hughes report suggests increasing oil output from the U.S.

After losing more than $3 in the previous two days, the barrel of West Texas Intermediate staged a modest recovery but failed to reconquer the $70 mark. With the weekly Baker Hughes report showing that the total number of active oil rigs in the U.S. rising to 873 from 869 last week, the WTI retraced a portion of its daily gains and was last seen trading quietly around $69, where it was up around 30 cents on the day.

Despite today's recovery, the WTI is down more than $2 after suffering heavy losses on this week's EIA report, which showed an increase of 6.5 million barrels in the U.S. crude oil stocks.

Earlier today, the data from China showed that the refinery output in China rose to a record high of 12.49 million barrels per day. Additionally, citing an internal document, Reuters reported that OPEC and non-OPEC allies pumped an extra 724,000 bpd of oil in September as compared to May and the compliance with the supply pact was 111% in the same period.

Commenting on these developments, "China's healthy oil demand, together with persistently high compliance of countries participating in the OPEC-led output-cut agreement, are supportive of prices in today's trading session," Abhishek Kumar, a senior energy analyst at Interfax Energy in London, told Reuters.

Technical levels to consider

With a decisive break above $70 (psychological level), the WTI could extend its recovery and target $71.20 (20-DMA) and $72.40 (Oct. 17 high). On the downside, supports could be seen at $68.50 (Oct. 18 low), $67.50 (Sep. 11 low) and $66.80 (Sep. 7 low).