Crude Prices Edge Lower on Oversupply Worries, Eke out Weekly Gain

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Crude Prices Edge Lower on Oversupply Worries, Eke out Weekly Gain

Oil prices ended lower for the second straight day on Friday, reversing most of the week’s gains on worries of oversupply on the back of record output levels by the world’s biggest producers.

Light sweet crude for July delivery ended 81 cents or 1.3% lower at $59.96 a barrel on the New York Mercantile Exchange falling below the psychologically significant $60 a barrel level for the first time in a week.

Brent futures, the global benchmark, ended $1.24 or 1.9% lower at $63.97 a barrel on the London based ICE Futures Exchange.

“The U.S. oil price has moved above the $61/bbl level three times since the beginning of May and failed to remain above this level,” Dominick Chirichella, analyst at the Energy Management Institute, told the Wall Street Journal.

Data by oilfield services provider Baker Hughes showed that the number of active rigs in the US fell further last week although this data could not offset negative market sentiment from the glut reports.

Also weighing prices down was a rally in the value of the dollar on a stronger than expected report on retail sales and consumer sentiment in the US.

A stronger greenback is bearish for the demand of commodities denominated in dollars like oil as it makes them more expensive to holders of foreign currencies.

Also aiding the rally in the dollar were developments in Greece after the International Monetary Fund reported on Thursday that its team of negotiators had exited the talks on a perceived lack of progress on a potential bailout deal.

“The Greece debt debate is clobbering the euro, kyboshing a rally in crude,” said Matt Smith, director of commodity research at energy intelligence firm ClipperDatadata, told Reuters.

“Rumblings of an impending rise in Saudi production is also providing a downbeat end to the week.”

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com