Crude prices settled at a multi month low weighed down by data showing an increase in the number of active rigs in the US this week.
Light sweet crude for September delivery settled 31 cents or 0.61% lower at $48.14 a barrel on the New York Mercantile Exchange. Based on the most active contracts, prices ended 5.4% for the week with the new front month contract falling 6% for the same period.
Brent Futures, the global benchmark ended 65 cents or 1.2% lower at $54,62 a barrel on the London based ICE Futures Exchange falling by more than 4.3% for the week.
Oilfield services provider Baker Hughes reported on Friday that the number of active oil rigs in the US grew by 21 to 659 this week after falling by seven last week.
The increase comes just a day after the oil market entered bear territory with a 22% decline since its June 10 high close of $61.43 a barrel indicative of negative sentiment in the market.
“The bear market was triggered by the generally growing realization that the already oversupplied oil market would face even looser conditions, largely triggered by sharp gains in Saudi Arabian supplies each month,” Matt Parry, senior oil analyst at the International Energy Agency in Paris, told Market Watch in an email.
The drill count is down by more than 903 more than 12 months ago but the production levels in the US have held steady at multi-decade highs according to the data.
Also pressuring the prices was worse than expected economic data from China with a a preliminary survey showing that the country’s factory sector contracted the most in more than 15 months in July. This follows a more than one month long slide in stocks in the country.
A robust dollar also weighed on the prices. According to the Wall Street Journal Dollar Index, which tracks the value of the greenback against a basket of foreign currencies, the dollar rose 0.2% Friday.
A stronger dollar is bearish for the demand of commodities denominated in dollars like oil as it makes them more expensive to holders of foreign currencies.
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