WTI looks to settle above $55, gains more than 3% for the week

• OPEC output drops to two-year lows in January.
• US sanctions on Venezuela supports crude oil rally.
• Baker Hughes rig count declines to 847.

Crude oil prices staged a strong rally in the second half of the day and with the barrel of West Texas Intermediate rising to its highest level since November 21 at $55.60. As of writing, the WTI was trading at $55.45, adding 2.4% on a daily basis.

Earlier in the day, OPEC reported that the organisation's total crude oil output in January declined to 31.02 million barrels per day, the lowest reading in two years, to provide the initial boost. Furthermore, the U.S. Treasury Department announced the details of the oil sanctions on Venezuela, suggesting another drop in global oil supply and lifting the WTI even higher. "We are beginning to see the impact to crude supplies from the sanctions on Venezuela. It has driven up domestic crude prices, cutting into refiner margins," Andrew Lipow, president of Lipow OilAssociates in Houston, told Reuters on Friday.

Additionally, the weekly data published by General Electric Co's Baker Hughes energy services firm revealed that the total number of active oil rigs in the U.S. dropped to 847 from 862 a week ago to show the U.S. output is also likely to continue to fall. 

Key technical levels