Crude Oil Ends Higher, Pushing $53 A Barrel; Gains 2.1% For Week

(RTTNews) - U.S. crude oil soared to end sharply higher for a second straight session Friday, on improved market sentiment with an uptick in the eurozone economy and declining rig counts in the U.S. even as oil producers continue to cut spending on drilling. Investors expect the trend to help thin supplies and lift demand for oil. The uptick comes amid recent data showing continued build-up in U.S. crude stockpiles.

For the week, oil futures gained 2.1 percent.

Weekly data from oilfield service provider Baker Hughes Inc. (BHI) showed the number of active U.S. rigs drilling for oil and natural gas dropped by 98 to 1,358 units as of February 13, and declined by 406 units from a year ago. This is more than a 5-year low. In Canada, the rig count as on February 13 was 382 units, up 1 from last week, but down 252 units from a year ago.

Meanwhile, oil producer Apache Corp. (APA) on Thursday indicated plans to stop some of its drilling activities due to high service costs and low prices.

Encouraging economic news out of the eurozone raised demand prospects, giving crude oil a modest lift, notwithstanding some soft data from the U.S.

Helped by growth in Germany, the European Union's statistics agency said Friday the combined gross domestic product of the 19 countries that share the euro, was up 0.3% sequentially in the fourth quarter. Germany led the pack with its economy growing a relatively robust 0.7 percent.

In the U.S., a University of Michigan report on Friday showed an unexpected, sharp pullback on its U.S. consumer sentiment index in February, after having reported the index at an eleven-year high in the previous month. Meanwhile, a Labor Department report on Friday showed another steep drop in U.S. import prices in January, attributed largely to falling energy prices.

Light Sweet Crude Oil futures for March delivery, the most actively traded contract, soared $1.57 or 3.1 percent to settle at $52.78 a barrel on the New York Mercantile Exchange Friday. Crude prices for March delivery scaled a high of $53.43 a barrel intraday and a low of $51.03.

On Thursday, crude oil settled sharply higher at $51.21 a barrel, up $2.37 or 4.9 percent, on a weak dollar and rising optimism of demand growth as oil producers continued to scale down investments, as well as over news that pro-Russia rebels and Ukraine government agreed to a ceasefire.

On the economic front, a University of Michigan report on Friday unexpectedly showed a sharp pullback on its consumer sentiment index in February, after having reported U.S. consumer sentiment at an eleven-year high in the previous month. The University of Michigan's preliminary consumer sentiment index for February tumbled to 93.6 from the final January reading of 98.1. Economists expected the index to edge up to a reading of 98.5.

The unexpected pullback by the index reflected deterioration in both consumers' assessment of current conditions as well as their expectations.

With fuel prices showing another substantial decrease, a U.S. Labor Department report on Friday showed another steep drop in import prices in January. The report said U.S. import prices plummeted by 2.8 percent in January after tumbling by a revised 1.9 percent in December. Economists expected prices to plunge by 3.0 percent compared to the 2.5 percent drop originally reported for the previous month.

Additionally, the Labor Department said export prices slumped by 2.0 percent in January following a revised 1.0 percent decrease in December. Export prices had been expected to fall by 0.8 percent compared to the 1.2 percent decline that had been reported for the previous month.

Eurozone economic growth picked up in the fourth quarter suggesting that lower oil prices and a weak euro boosted demand and in turn underpinned activity, flash estimates released by Eurostat showed Friday.

Nonetheless, the overall expansion in the 19-nation bloc was driven mainly by the power engine of the region, Germany. Meanwhile, other member nations exhibited diverging trends. Gross domestic product advanced 0.3 percent sequentially, faster than the 0.2 percent growth seen in the third quarter. The growth rate was expected to halt at 0.2 percent.

Germany's economic growth accelerated more-than-expected on domestic spending and exports in the fourth quarter, while investment dragged expansion in France.

German gross domestic product advanced 0.7 percent sequentially, much faster than a modest 0.1 percent rise in the prior quarter, data from Destatis revealed Friday. This was the fastest growth in three quarters and also exceeded a 0.3 percent rise forecast by economists.

The French economic growth slowed as expected in the fourth quarter, the statistical office Insee reported Friday. France's gross domestic product rose 0.1 percent sequentially, in line with forecast, but slower than third quarter's 0.3 percent expansion.

Elsewhere in Asia, a leading indicator of economic activity in China rose at a slower pace in January, a survey by the Conference Board showed Friday. The Conference Board's leading economic indicators index for China increased 0.9 percent month-on-month in January following the 1.1 percent rise in December.