Crude futures ended lower on Friday ahead of the holiday weekend on a robust US dollar and a slowdown in the decline in US drilling,
The greenback strengthened against a basket of foreign currencies during the day on a stronger than expected inflation reading. A stronger dollar is bearish for dollar denominated commodities like oil as it makes them expensive for holders of foreign currencies.
“The oil market doesn’t look like it’s moving too much on fundamentals as much as it’s really moving inverse to the dollar every day,” Mark Benigno, co-director of energy trading at INTL FCStone Inc, told the Wall Street Journal.
Also weighing on the prices were concerns that fewer oil rigs were inactive this weeks with oilfield providers reporting that drillers cut the number of active rigs by just one this week.
The slowdown in the decline is the strongest indication yet that a six month slump in drilling inactivity is coming to an end.
Light sweet crude for July delivery ended $1 or 1.7% down at $59.72 a barrel on the New York Mercantile Exchange.
The July contract, which became the front month contract on Monday, dipped 1.4% for the week but tracing prices for the most active contracts this week, prices advanced by 0.05% with the June contract expiring at $59.69 a barrel.
Brent for June delivery fell by $1 or 1.50% to $65.37 a barrel on the London based ICE futures Exchange. The global benchmark fell by 2.1% for the week.
“The oil market is showing some confidence that the market will rebalance as demand grows and U.S. shale-oil production declines.” Analyst Tim Evans at Citi Futures told Market Watch.
“But stronger demand and weaker U.S. oil production aren’t enough to tighten the market fast enough, and materially stronger prices must entail a drop in OPEC supply, which doesn’t appear to be happening,” he added.
To contact the reporter of the story: Jonathan Millet at firstname.lastname@example.org