Crude-oil futures settled with a loss on Friday as a drop in the U.S. stock market and ongoing debt woes in Greece fed concerns about energy demand, but after posting gains over the past six sessions, prices registered a gain of nearly 8% for the week.
U.S. crude inventories have continued to climb, with the government data recently showing a 14th straight weekly increase, but many in the market remain optimistic that recent declines in the number of U.S. rigs actively drilling for oil will soon lead to a sizable fall in the nation’s production.
May crude settled at $55.74 a barrel, down 97 cents, or 1.7%, on the New York Mercantile Exchange. For the week, prices gained roughly 7.9% after settling on Thursday at their highest level this year. The May contracts will expire on Tuesday. June Brent crude on London’s ICE Futures exchange fell 53 cents, or 0.8%, to $63.45 a barrel. For the week, prices based on the front-month contract were up around 7.6%.
Losses for oil intensified near the close of the Nymex trading session as a weekly decline in the number of active U.S. drilling rigs came in less than expected and traders worried about the falling stock market, the Chinese economy and debt woes in Greece, said Phil Flynn, senior market analyst at Price Futures Group. Baker Hughes on Friday reported that the number of U.S. rigs actively drilling for oil as of April 17 fell 26 for the week to 734. That is down 51% year over year.
Most of the recent euphoria in oil markets has been due to signs that U.S. oil production is peaking, and may start declining in the next few months, and reports of a widening conflict in Yemen. Jay Hatfield, AMAZA portfolio manager and president of Infrastructure Capital Advisors, said he sees potential for a gradual decline in U.S. oil production and an increase in demand during the summer-driving season, but Nymex oil prices “may continue to trade in a range of $50-$55 in the current shoulder months until we start to see positive data from lower production and increased consumption.”