Crude oil futures - weekly outlook: June 1 - 5

Investing.com - West Texas Intermediate oil futures soared more than 4% on Friday, after data showed that the number of rigs drilling for oil in the U.S. fell by the most in four weeks last week, soothing worries that the sharp decline in drilling activity may be nearing an end.

On the New York Mercantile Exchange, crude oil for delivery in July jumped $2.62, or 4.54%, to end the week at $60.30 a barrel. On Thursday, Nymex oil prices fell to $56.51, the lowest level since April 28. For the week, New York-traded oil futures rose 25 cents, or 0.97%.

Industry research group Baker Hughes (NYSE:BHI) said late Friday that the number of rigs drilling for oil in the U.S. fell by 13 last week to 646. The drop marks the 25th straight week of declines and the biggest fall in four weeks.

A week earlier, the rig count fell by just one, marking the slowest rate decline over the last 24 weeks and fuelling concerns that U.S. shale production could rebound in the months ahead.

Market players have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.

The U.S. Energy Information Administration said on Wednesday that crude oil inventories fell by 2.8 million barrels last week to 479.4 million. It was the fourth straight weekly decline.

Elsewhere, on the ICE Futures Exchange in London, Brent for July delivery rallied $2.98, or 4.76%, to end at $65.56 a barrel on Friday. A day earlier, prices slumped to $61.24, a level not seen since April 15. London-traded Brent futures tacked on 12 cents, or 0.29%, on the week.

Meanwhile, the spread between the Brent and the WTI crude contracts stood at $5.26 a barrel by close of trade on Friday, compared to $5.65 in the preceding week.

Elsewhere, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slid 0.2% on Friday to end at 96.94, moving further way from Wednesday’s five-week peak of 97.88.

The greenback weakened after official data showed that the U.S. economy contracted 0.7% in the first three months of 2015, compared to an initial estimate of growth of 0.2%. The downward revision was broadly in line with analysts' expectations.

Despite the disappointing reading, most market experts expect the U.S. economy to rebound in the second quarter, as transitory factors recede.

Economic data released in the past week, including reports on inflation, new home sales, business investment and consumer confidence all indicated that the economy is gaining momentum after a slowdown in the first quarter, supporting the case for higher interest rates later this year.