U.S. crude oil rebounded to end higher on Friday, after data earlier this week showed crude stockpiles in the country to have declined and as well on some positive jobs data from the U.S. boosting demand growth prospects for oil.
For the week, oil futures gained about 0.4 percent for an eighth consecutive week.
Investors continued to weigh the weekly crude oil inventory data which showed supplies to have declined for the first time following 16 straight weeks of gain since January this year.
Earlier today, oilfield service company Baker Hughes said the number of U.S. rigs actively drilling oil and natural gas as of May 8 dropped by 11 rigs from last week to 894, and down 961 rigs from last year. The number of oil rigs dropped 11 units for the week to 668.
Also on focus is the ongoing civil war and uncertainty in Yemen, and Iran’s talks with the West over its nuclear enrichment program. A confirmed and satisfactory deal would see Iran back in the international oil market in full swing, which could once again pressurize markets.
Iran on Wednesday said it could pump over four million barrels of oil a day in less than a year if sanctions on Tehran were to be lifted.
A Labor Department report on Friday showed unemployment rate in the U.S. dropped to its lowest level in almost seven years, with employment in the U.S. increasing roughly in line with economists’ estimates in April. The unemployment rate at 5.4 percent was at its lowest since hitting a matching rate in May 2008.
The report said non-farm payroll employment increased by 223,000 jobs in April compared to economist estimates for an increase of about 220,000 jobs. It is now expected the strong jobs report will push the Federal Reserve to raise interest rates in either July or September.
Light Sweet Crude Oil futures for June delivery, the most actively traded contract, gained $0.45 or 0.8 percent, to settle at $59.39 a barrel on the New York Mercantile Exchange Friday.
Crude prices for June delivery scaled a high of $59.90 a barrel intraday and a low of $58.14.
On Thursday, crude oil plummeted $1.99 or 3.3 percent, to settle at $58.94 a barrel on a strong dollar after data from the U.S. showed better-than-expected numbers for initial claims for unemployment benefits.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 94.80 on Friday, up from its previous close of 94.61 on Thursday in late North American trade. The dollar scaled a high of 95.07 intraday and a low of 94.32.
The euro trended lower against the dollar at $1.1202 on Friday, as compared to its previous close of $1.1267 in North American trade late Thursday. The euro scaled a high of $1.1290 intraday and a low of $1.1182.
On the economic front, a Labor Department report said non-farm payroll employment increased by 223,000 jobs in April compared to economists’ estimates for an increase of about 220,000 jobs.
The overall job growth helped push the unemployment rate down to 5.4 percent in April from 5.5 percent in March, the lowest level since May 2008, and in line with economists’ estimates. However, the Labor Department also said the increase in employment in March was downwardly revised to 85,000 jobs from the previously reported 126,000 jobs.
Wholesale inventories in the U.S. rose less than expected in March, a report from the Commerce Department showed Friday. Wholesale inventories inched up 0.1 percent in March after rising by a downwardly revised 0.2 percent in February. Economists expected wholesale inventories to climb by 0.3 percent, matching the increase originally reported for the previous month.
China’s exports logged an unexpected drop on weak demand in April, with imports also declining more than expected adding to hopes of more economic stimulus. Exports fell 6.2 percent in April from last year in yuan terms, data from the General Administration of Customs showed Friday. Economists had forecast a 0.9 percent increase for April.
China’s imports registered a double-digit decrease of 16.1 percent annually, sharper than an expectation for a 8.4 percent drop. Consequently, the trade surplus came in at CNY 210.2 billion, below the consensus forecast of CNY 173.8 billion.
In U.S. dollar terms, exports were down 6.4 percent from a year ago, slower than March’s 15 percent decline. Exports were forecast to grow 1.6 percent. Imports declined 16.2 percent versus 12.7 percent fall in March. As a result, China’s trade surplus increased to $34.1 billion in April from $3.1 billion in March. The surplus was expected to rise to $39.6 billion.
Germany’s exports and imports growth exceeded expectations in March, with exports rising 1.2 percent month-on-month in March, much faster than the 0.4 percent rise forecast by economists. Nonetheless, this was slightly slower than the 1.4 percent rise seen in February.
German imports advanced 2.4 percent, while growth was expected to ease to 0.1 percent from 1.3 percent seen in February. As growth in imports outpaced export growth, the seasonally adjusted trade surplus dropped to EUR 19.3 billion from EUR 20 billion in February.
Germany’s industrial production declined unexpectedly from February, adding to uncertainty about the economic expansion in the first quarter. Industrial production declined by 0.5 percent in March after staying flat in February. Economists had forecast a 0.4 percent rise for March.
The UK’s visible trade gap narrowed to GBP 10.1 billion from GBP 10.8 billion in February, data from the Office for National Statistics showed Friday. Economists expected a smaller shortfall of GBP 9.8 billion.
The material has been provided by InstaForex Company – www.instaforex.com