Crude-oil futures finished the month deeper in bear-market territory Friday, registering its worst monthly slide, on a percentage basis, since 2008 after a report indicated a rise in rig counts. The number of U.S. oil rigs rose by five to 664, oil-services firm Baker Hughes reported Friday just before oil’s settlement. The rise in rigs stokes fears that U.S. oil producers aren’t tapping the breaks on oil production enough to soothe those concerned about global oversupply. Already under pressure on the day from a, West Texas Intermediate crude for September delivery shed $1.40, or 2.9%, to settle at $47.12 a barrel on the New York Mercantile Exchange. WTI finished with a weekly decline of about 2.5% and a monthly drop of 21%, according to FactSet. That places it squarely in bear-market territory.
September Brent crude oil —the international benchmark—on the ICE Futures exchange lost $1.10, or 2.1%, down to settle at 52.21 a barrel. For the week, Brent is down about 5% and has given up more than 18% in July, according to FactSet data.
Oil has been wrestling with a global glut but a strong dollar also makes dollar-denominated crude more expensive for buyers in other currencies. The dollar has been pressuring crude oil prices all week. Although the dollar index is about flat for the week it is up 1.8% for the month. The greenback climbed against most rival currencies on Friday, extending gains from Thursday, when data on economic growth in the U.S. enhanced expectations of a 2015 rate hike. The dollar, however, slipped against the euro on Friday after data showed the currency union didn’t slip into deflation in July.
High international supplies have kept prices under pressure and increased competition among producers, who are taking cost-cutting measures. But few have ventured to cut production. Despite several negative economic indicators coming from China, oil demand from the nation has held fairly steady with some opportunistic buyers taking advantage of low prices. Indian demand has also been fairly strong with the government looking to build a long-term strategic reserve.