US oil drops for third straight day

GMT 00:50 2015 Saturday ,16 May

Arab Today, arab today US oil drops for third straight day

US oil dropped for third day Friday
New York - AFP

US oil dropped for a third day Friday on persistent worries about the global supply glut heightened by weak US economic data and a slowdown in US rig cutbacks.

West Texas Intermediate (WTI) for June delivery, the US benchmark, slipped 19 cents to finish at $59.69 a barrel on the New York Mercantile Exchange.

In London, global benchmark Brent crude for delivery in July gained 11 cents at its settlement of $66.59 a barrel.

Tim Evans, an analyst at Citi Futures, said there was a "healthy round of end-of-the-week profit taking" as the market focus shifted to the second-quarter global oversupply.

The weekly Baker Hughes rig report showed the number of US oil drilling rigs fell by eight to 660, marking a slowdown in the cutbacks seen amid the decline in oil prices.

Compared with the October peak, the rig count has fallen 59.0 percent.

US crude oil production rose slightly last week, to 9.4 million barrels per day, as inventories held at record high levels, according to the Department of Energy.

The decline in the Baker Hughes rig count was the weakest since December 12, said James Williams of WTRG Economics, suggesting that US production would not slow as much as previously estimated.

For Citi's Evans, another batch of disappointing US data further also clouded the demand outlook for the world's largest crude oil consumer.

"Weaker-than-expected US industrial production and consumer confidence data also looks like it is undermining assumptions that the economy would rebound quickly from a soft Q1," Evans said.

US industrial production declined for a fifth consecutive month in April, by 0.3 percent, with mining output falling for a fourth month, dragged lower in part by a sharp fall in oil and gas drilling, the Federal Reserve reported.

The University of Michigan's consumer sentiment index for early May plunged to 88.6 from 95.9 in April.

Matt Smith of Schneider Electric said that Brent was holding up better than WTI because Middle East geopolitical concerns were keeping prices "twitchy."


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