What’s happening: US crude oil moved lower on Friday, but still closed the week with a small gain.
What happened: Baker Hughes reported an increase in US oil rigs, putting an end to three weeks of declines.
A slowdown in Eurozone’s economic activity along with a contraction in activity in Japan also added pressure on crude oil prices on Friday.
Why it matters: The number of oil rigs has declined significantly this year, down by 571 versus the year-ago levels, with a sharp downturn in demand for crude oil.
However, Baker Hughes said on Friday that the US oil rig count had risen by 11 to 183 last week, after declining for three consecutive weeks.
Sentiment was also hit by the Eurozone reporting a drop in the purchasing managers index to a two-month low of 51.6 for August. Meanwhile, services activity in Japan also contracted in August, with the au Jibun Bank services PMI slipping to 45.0 versus a reading of 45.4 in July.
Investors also remained worried about the resurgence of covid-19 infections in some parts of Europe impacting the energy-demand outlook.
Amid these concerns, investors shrugged off the Energy Information Administration’s report last week showing a decline of 1.6 million barrels in US crude inventories.
WTI (West Texas Intermediate) crude for October delivery declined 1.1% to settle at $42.34 per barrel on the NYMEX (New York Mercantile Exchange). The global benchmark Brent crude for October lost 1.2% to end at $44.35 per barrel. For the week, US crude gained 0.1%, while Brent lost 1%.
In other energy commodities, natural-gas futures for September climbed 4.1% to settle at $2.488 per million British thermal units on Friday, notching a weekly gain of 3.9%.
September gasoline slipped, however, by 1% to $1.2841 a gallon, while September heating oil declined 3.1% to $1.2080 a gallon.
What to watch: Traders will keep a close eye on economic reports and covid-19 numbers from several parts of the world, as well as any projections for the global economy. Markets await the EIA’s report on crude stockpiles scheduled for release on Wednesday.
Crude oil is expected to recover today from Friday’s decline, with the WTI trading higher by 0.3% to reach $42.45 in the Asian session.