Investing.com - Crude oil futures fell sharply on Friday, as the U.S. dollar strengthened broadly following the release of upbeat U.S. employment data.
The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, jumped 1.39% to 97.74 late Friday, the highest since September 2003.
The dollar's gains came after the Labor Department reported that the U.S. economy added 295,000 jobs in February, far more than the 240,000 forecast by economists.
The unemployment rate ticked down to 5.5% from 5.7% in January, the lowest since May 2008. Economists had forecast the unemployment rate would fall to 5.6%.
The robust jobs report fuelled expectations that the Federal Reserve will start raising interest rates as early as June, boosting the greenback.
Dollar-denominated oil futures contracts tend to fall when the dollar rises, as this makes oil more expensive for buyers in other currencies.
Meanwhile, the euro sank to an 11-year low against the dollar after European Central Bank President Mario Draghi confirmed that it will begin purchasing euro zone government bonds on Monday under its new quantitative easing program.
The combined monthly asset purchases will amount to €60 billion per month and are expected to run until September 2016.
On the New York Mercantile Exchange, crude oil for delivery in April slumped $1.15, or 2.27%, on Friday to end the week at $49.61 a barrel. On Thursday, Nymex oil declined 77 cents, or 1.49%, to close at $50.76.
For the week, New York-traded oil futures dipped 15 cents, or 0.3%, the third consecutive weekly loss.
Industry research group Baker Hughes said Friday that the number of rigs drilling for oil in the U.S. fell by 63 last week to 923, the lowest since June 2011.
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.
However, total U.S. crude oil inventories stood at 444.4 million barrels as of last week, the most in at least 80 years, indicating that cheap prices have yet to affect output.
Elsewhere, on the ICE Futures Exchange in London, Brent for April delivery shed 75 cents, or 1.24%, on Friday to settle the week at $59.73 a barrel by close of trade.
The April Brent contract tumbled $2.77, or 4.55%, on the week, the worst weekly loss since early-January, amid easing concerns over supply disruptions from Libya.
The spread between the Brent and the WTI crude contracts stood at $10.12 a barrel by close of trade on Friday, compared to $10.29 in the preceding week.
In the week ahead, markets will be watching talks on Greece by euro zone finance ministers in Brussels on Monday, while Thursday’s U.S. retail sales report will also be closely watched for further indications on the strength of the recovery.
Chinese government data on consumer price inflation and industrial production will also be closely-watched.
On Sunday, China reported a trade surplus of $60.6 billion in the January-February period, compared to expectations for a surplus of $10.8 billion and up from a surplus of $60.0 in January.
Exports surged 48.3% from a year earlier last month, above expectations for a 14.2% increase, while imports tumbled 20.5%, much worse than forecasts for a decline of 10.0%.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, March 9
Eurogroup finance ministers are to hold a meeting in Brussels to discuss funding options for Greece.
Tuesday, March 10
China is to release reports on consumer and producer price inflation.
The American Petroleum Institute, an industry group, is to publish its weekly report on oil supplies.
Wednesday, March 11
China is to publish reports on industrial production and fixed asset investment.
Later in the day, the U.S. is to release its weekly government report on oil inventories.
Thursday, March 12
The U.S. is to produce data on retail sales and initial jobless claims.
Friday, March 13
The U.S. is to round up the week with data on producer prices and consumer sentiment.