Oil falls with Wall Street but US crude posts another weekly gain
NEW YORK – Crude futures fell about 2 percent on Friday as traders shrugged off a drop in the number of US rigs drilling for oil and focussed instead on a supply glut and declining stock prices on Wall Street.
Trading volumes in crude were lighter than on Thursday, with players appearing hesitant to put on big positions ahead of the US Labor Day holiday weekend.
“I get the feeling the longs do not want to wait out the three-day weekend,” said Tariq Zahir, a trader in crude oil spreads at Tyche Capital Advisors in Laurel Hollow, New York.
Despite the day’s drop, US crude prices notched a second straight weekly gain, helped by gains in the past two sessions.
US crude CLc1 settled down 70 cents, or 1.5 percent, at $46.05. It slid $1.14 to a post-settlement low of $45.61 by 5:02 p.m. EDT (2102 GMT).
For the week though, US crude was up almost 2 percent, after last week’s near 12 percent gain, the biggest since 2011.
Brent LCOc1, the global oil benchmark, settled down $1.07, or 2.1 percent, at $49.61 a barrel. It was down almost 1 percent on the week.
Oil turned weaker as the market shadowed moves in equities after a US jobs report for August proved to be neither good nor bad enough to help the US Federal Reserve decide on a potential rate hike.
The oil rig count issued by oil services firm Baker Hughes showed the number of US rigs drilling for oil fell by 13 this week. Coming after six consecutive weeks of rises in the rig count, the data indicated less drilling activity, and, possibly, less crude production in the future. Revised government data for June oil output, issued this week, also showed the US industry pumped less than initially estimated.
But traders seemed more concerned about the immediate glut in supply, particularly after US inventories rose by 4.7 million barrels last week.
“Clearly the precipitous drop in oil prices has hit capital expenditures for new drilling in the US,” said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland.
Still, crude prices are “likely going to see further declines, albeit minor given how much they have already come down,” he said.
Oil had a wild ride the past two weeks. US crude hit a 6-1/2-year low of $37.75 early last week, then climbed almost 28 percent over three sessions into Monday before consolidating. –Reuters