Oil set to log worst monthly performance of 2015; Analysts suggest no more further decline
On Friday crude oil prices dropped on the news of robust economic growth in the U.S. which strengthened the dollar, leading the commodity to log its worst monthly performance of the year to date.
Although the upbeat U.S. economic data is usually positive for oil in the long-term, it also increases dollar’s value, which in the short-term tends to push down oil prices.
In July, U.S. crude has lost 20%, the worst monthly performance for an active contract this year, according to FactSet Research, while Brent has been down 17%, which is also the worst performance for an active contract this year.
Nymex light, sweet crude futures for delivery in September traded at $47.85 a
barrel, down 67 cents, or 1.4%, in the Globex electronic session.
Brent crude on London’s ICE Futures exchange gave up 59 cents, or 1.1%, to $52.74 a barrel.
“The dollar effect is usually very short and unlikely to cause a trend downwards,” said Daniel Ang, an investment analyst at Phillip Futures. “Prices are unlikely to fall much further.”
Earlier this week on Tuesday, prices hit a four-month trough following a rout in Chinese stock markets that spurred concerns about
weakening demand from one of the world’s largest consumers.
Market players now await Friday's weekly U.S. oil rig count from oil services firm Baker Hughes
for further cues on the supply-demand balance nationwide.
Last
week, the company said the total number of U.S. oil rigs increased by 21 to
659. Earlier this summer, the total increased on two consecutive weeks,
a rarity considering that the count previously declined for a period
of 29 straight weeks.
Last autumn, U.S. oil rigs peaked at a level above 1,500.
