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Oil falls to lowest close since March, down a fourth week
[NEW YORK] Brent and US crude futures settled on Friday at their lowest since March and posted their fourth straight weekly decline as weak economic data from China and a rise in US oil drilling rigs applied pressure.
US energy firms added 21 oil rigs this week after pulling seven rigs last week, oil services company Baker Hughes Inc said.
The rig count data arrived a day after US crude fell into bear market territory, as a drop of 21 percent from its June 10 close at US$61.43 a barrel indicated the market's prevailing negative sentiment.
China's factory sector contracted in July by the most in 15 months, a preliminary private survey showed. The weaker-than-expected result followed a stock market slide that began in June.
Brent September crude fell 65 cents to settle at US$54.62 a barrel, the lowest close since March 19 and off 4.3 per cent for the week. The US$54.30 session low was the lowest front-month price since April 2.
US September crude fell 31 cents to end at US$48.14, its lowest settlement since March 31 and down 5.5 per cent for the week. The session low of US$47.72 was the lowest intraday price since April 1. "Crude was already lower on concerns about the global economy and the rig count added to the negativity," said Phil Flynn, analyst at Price Futures Group in Chicago.
The world's top oil companies are set to report second-quarter earnings showing another drop in profits that could force more spending cuts, according to analysts.
The dollar's strength also applied pressure, as a stronger US dollar makes greenback-denominated oil more expensive for consumers using other currencies.
Brent and US crude have so far clocked double-digit losses in July. With US crude off 19 per cent, it could challenge December's 19.4 per cent drop, which was the biggest monthly slump since the financial crisis in 2008.
Money managers cut their net long futures and options positions in the week to July 21, the US Commodity Futures Trading Commission said.
Demand for gasoline has been strong, keeping refineries churning at high utilization rates, but August US RBOB gasoline futures settled below its 200-day moving average of US$1.8514 a gallon on Friday. "This looks like profit-taking as the end of the US driving season gets closer," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
The 5 per cent weekly drop was gasoline's biggest since mid-March and the sixth consecutive weekly slide, most since the seven weeks ending Jan 9.
US ultra-low sulfur diesel (ULSD) futures also fell a sixth straight week.