Crude oil futures - weekly outlook: May 11 - 15

Investing.com - West Texas Intermediate oil futures edged higher on Friday, as an ongoing collapse in rigs drilling for oil in the U.S. added to expectations that shale oil production has peaked and may start falling in the coming months.

On the New York Mercantile Exchange, crude oil for delivery in June tacked on 45 cents, or 0.76%, to end the week at $59.39 a barrel. On Thursday, Nymex oil plunged $1.99, or 3.27%, to settle at $58.94 as investors cashed out of the market to lock in gains from a recent rally.

New York-traded oil futures rose to $62.58 on Wednesday, the most since December 10. For the week, futures inched up 9 cents, or 0.41%, the sixth weekly gain in the past seven weeks.

Industry research group Baker Hughes (NYSE:BHI) said late Friday that the number of rigs drilling for oil in the U.S. fell by 11 last week to 668, the 22nd straight week of declines and the lowest level since September 2010.

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 3.9 million barrels last week to 487.0 million, compared to expectations for an increase of 1.5 million barrels to 492.4 million.

Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, fell for the second consecutive week, dropping by 12,000 barrels to 61.7 million.

Elsewhere, on the ICE Futures Exchange in London, Brent for June delivery dipped 15 cents, or 0.23%, to end at $65.39 a barrel on Friday. A day earlier, prices sank $2.23, or 3.29%.

London-traded Brent futures rallied to $69.93 on Wednesday, a level not seen since December 5. On the week, Brent prices lost $1.01, or 1.61%, the first weekly decline in five weeks.

Meanwhile, the spread between the Brent and the WTI crude contracts stood at $6.00 a barrel by close of trade on Friday, compared to $7.63 in the preceding week.

Elsewhere, the Labor Department reported Friday that the U.S. economy added 223,000 new jobs in April, just below expectations for jobs growth of 224,000. March’s figure was revised down to just 85,000 from a previously reported gain of 126,000.

The unemployment rate fell from 5.5% to a near seven-year low of 5.4% last month, broadly in line with forecasts.

The U.S. dollar initially rallied against a basket of major currencies following the data, before giving back some gains, as traders focused on the negative details of the jobs report.

The dollar index rose to a session peak of 95.17, before trimming gains to settle at 94.91 by late Friday, up 0.18%. On Wednesday, the index slumped to an 11-week low of 93.95.

Recent economic reports have indicated that the U.S. economy has slowed since the start of the year, prompting many investors to push back expectations on the timing of an initial rate hike by the Fed to late-2015, instead of midyear.

In China, weak trade data released on Friday fuelled speculation that policymakers in Beijing will have to do more to jumpstart the economy.

China reported a trade surplus of $34.1 billion in April, below expectations for a surplus of $39.5 billion. Exports slumped 6.4% from a year earlier last month, disappointing expectations for a gain of 2.4%, while imports sank 16.2%, worse than forecasts for a decline of 12.0%.

The slide in imports pointed to persistent weakness in the economy, fuelling speculation policymakers will do more to boost growth.

On Sunday, the People's Bank of China cut its benchmark interest rate by a quarter percentage point to 5.10% from 5.35%, in order to spur economic activity and boost growth.

It was the third rate cut in less than six months, indicating that Beijing is becoming more aggressive in supporting the economy as its momentum slows and deflation risks rise.

The U.S. and China are the world’s two largest oil consuming nations.

In the week ahead, investors will be focusing on Wednesday's U.S. retail sales report for April, for fresh indications on the strength of the economy and the timing of a U.S. rate increase.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday as there is no relevant data on this day.

Tuesday, May 12

The Organization of Petroleum Exporting Counties will publish its monthly assessment of oil markets.

Later in the day, the American Petroleum Institute, an industry group, is to publish its weekly report on oil supplies.

Wednesday, May 13

China is to release a string of data, including reports on industrial production, fixed asset investment and retail sales.

The euro zone is to publish what will be closely watched data on first quarter economic growth.

Meanwhile, the International Energy Agency will release its monthly report on global oil supply and demand.

Later in the day, the U.S. is to publish data on retail sales as well as its weekly report on oil inventories.

Thursday, May 14

The U.S. is to publish reports on producer prices and initial jobless claims.

Friday, May 15

The U.S. is to round up the week with reports on industrial production, manufacturing activity in the New York region and consumer sentiment.