MTECHTIPS;-Crude oil futures – weekly outlook: July 6 – 10
Oil prices fell in thin trade on Friday as an increase in the U.S. rig count added to fears over a global supply glut. Crude for August delivery settled at down 2.48% at $55.52 a barrel in electronic trading on the New York Mercantile Exchange. There was no floor trading because of the U.S. Independence Day holiday. For the week, the contract dropped 4.53%, the worst weekly decline since early March. Brent crude for August delivery, the global benchmark, was down 2.44%, to settle at $60.56 a barrel on the ICE Futures exchange in London. The contract lost 4.65% for the week. The drop in oil prices came after Baker Hughes (NYSE:BHI) reported Thursday that the number of U.S. oil-drilling rigs rose by 12 to 640 last week, snapping 29 straight weeks of declines. The rig count is seen by many investors as a proxy for activity in the oil industry. The report came after data on Wednesday showing an unexpected increase in U.S. oil stockpiles in the previous week, on the back of increased production. The U.S. Energy Information Administration said crude stockpiles rose by 2.4 million barrels in the week to June 26. The consensus forecast had been for a decrease of 2 million barrels. It was the first supply build since April. At 465.4 million barrels, oil inventories remain near levels not seen for this time of year in at least the last 80 years. Global oil production is outpacing demand following a boom in U.S. shale oil production and after a decision by the Organization of Petroleum Exporting Countries last year not to cut production. Investors were also eyeing nuclear talks between the West and Iran, which could push millions of barrels of crude into the oversupplied world market. The head of the International Atomic Energy Agency said Friday that Iran and the IAEA have worked out “some ways forward” to a deal which is expected to pave the way for the lifting of Western sanctions. Market participants were also tracking ongoing developments in Greece ahead of a weekend referendum on whether to accept or reject the terms of an international bailout deal, which could set the county on a course for an exit from the euro zone.