😎 Summer Sale Exclusive - Up to 50% off AI-powered stock picks by InvestingProCLAIM SALE

Crude oil settles lower, but bags 2-week win streak as demand outlook improves

Published 21/06/2024, 13:26
© Reuters.
CVX
-
HES
-
LCO
-
CL
-

Investing.com -- Oil prices settled lower Friday, pressured by a stronger dollar, but still bagged a second-straight weekly win amid signs of improving demand in the United States, the world's biggest oil consumer.

At 14:30 ET (18:30 GMT), the U.S. crude futures traded 0.7% lower to settle at around $80.73 a barrel and the Brent contract fell 0.7% to $85.24 a barrel. 

Stronger dollar weighs, but crude in weekly win on signs of improving demand

A dollar jumped Friday as data showing the services and manufacturing activity surprised to the upside in June, eased bets for sooner rather than later rate cuts. 

As oil is priced in dollars, a stronger greenback makes oil more expensive for foreign buyers weighing on demand.  

Still, sentiment on demand remains on the up and up amid recent data showing decline in weekly U.S. crude and gasoline inventories.  

Data released on Thursday by the Energy Information Administration showed a drawdown in U.S. crude stockpiles by 2.5 million barrels in the week ending June 14, more than the 2.2 million-barrel draw expected.

Additionally, U.S. government data showed total product supplied, a proxy for the country's demand, rose by 1.9 million barrels per day (bpd) on the week to 21.1 million bpd.

Worries over economic activity in the world’s largest economy have weighed on the crude market as the Federal Reserve keeps interest rates at elevated levels.

“The 4-week average implied gasoline demand also continues to trend higher as we move deeper into the US summer driving season, which will ease some concerns over gasoline demand. Demand though is still tracking just below levels seen last year,” said analysts at ING, in a note.

Baker Hughes rig count falls 

The number of oil rigs operating in the U.S. fell by 3 to 485, according to data Friday from energy services firm Baker Hughes.  

The fall in rig count, pointing to drilling activity, comes even as the U.S. Energy Information Administration raised its U.S. crude oil production forecast for 2024.

The EIA now sees U.S. crude oil production averaging 13.24 million barrels per day this year, up from a prior estimate of 13.20 million barrels per day.

Geopolitical risk adds support

Ukraine's military said its drones struck four oil refineries, radar stations and other military objects in Russia in the early hours of Friday.

Meanwhile, Israel continues its bombardment of Gaza in its war with Hamas, a few days after the country’s Foreign Minister Israel Katz also warned of a possible "all out war" with Lebanon's Hezbollah.

The head of Hezbollah this week pledged a full-on conflict with Israel in the event of a cross-border war and also threatened EU member Cyprus for the first time.

A face-off between Israel and Hezbollah raises the risk of a wider conflict in this important oil-rich region, potentially disrupting global supplies. 

Peter Nurse contributed to this story.  

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.