Crude Oil Ends Lower On Supply Glut Worries

(RTTNews) - U.S. crude oil rallied towards the close, but still ended slightly lower for a third straight session Friday, on continued fears of a supply glut with Iran set to flood global markets, even as the dollar trended higher against a basket of some major currencies.

For the week, crude oil futures shed about 3.5 percent.

The agreement between Iran and the West over Tehran's nuclear program resulting in the lifting of sanctions against the Middle East country is expected to add millions of barrels of oil to the global markets. But it is generally felt that it would Iran several months before Iranian crude can impact global markets, even as it has to ramp up production and ship to various markets.

Meanwhile, crude oil prices dropped sharply after the official weekly oil report earlier on Wednesday showed a more-than-expected decline in U.S. stockpiles.

Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI futures and the biggest oil-storage hub in the U.S., rose for a third week to 57.1 million barrels through July 10.

Meanwhile, Baker Hughes said rigs actively drilling for oil in the U.S. last week declined by 6 units to 857, after two consecutive weeks of rise.

In a slew of upbeat economic news, U.S. consumer prices rose in line with estimates in June, partly reflecting another notable increase in energy prices. In another upbeat sign for the housing market, a Commerce Department report on Friday showed significant increases in both housing starts and building permits in June.

Nevertheless, a report from the University of Michigan on Friday said consumer sentiment in the U.S. pulled back in July, after having reported a substantial improvement in in the previous month.

Light Sweet Crude Oil futures for August delivery, the most actively traded contract, inched down $0.02, to settle at $50.89 a barrel on the New York Mercantile Exchange Friday.

Crude prices for August delivery scaled a high of $51.23 a barrel intraday and a low of $50.14.

On Thursday, crude oil prices fell 0.50 or 1 percent, to settle at $50.91 a barrel, as fears of a global supply glut continued to grip markets after Iran's deal with the West on limiting its nuclear program in exchange for lifting sanctions.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 97.87 on Friday, up from its previous close of 97.66 in late North American trade on Thursday. The dollar scaled a high of 97.91 intraday and a low of 97.42.

The euro trended lower against the dollar at $1.0851 on Friday, as compared to its previous close of $1.0875 in North American trade late Thursday. The euro scaled a high of $1.0908 intraday and a low of $1.0842.

On the economic front, a Labor Department report on Friday showed U.S. consumer price index climbed by 0.3 percent in June following a 0.4 percent increase in May, in line with economists' estimates.

In another upbeat sign for the housing market, a Commerce Department report on Friday showed housing starts to have jumped 9.8 percent to an annual rate of 1.174 million in June from the revised May estimate of 1.069 million. Economists expected housing starts to climb to a rate of 1.125 million from the 1.036 million originally reported for the previous month.

Building permits, an indicator of future housing demand, surged 7.4 percent to an annual rate of 1.343 million in June from the revised May rate of 1.125 million. Economists expected building permits to rise to an annual rate of 1.178 million from the 1.275 million originally reported for the previous month.

A report from the University of Michigan on Friday showed consumer sentiment in the U.S. to have pulled back in July, after reporting a substantial improvement in in the previous month. A preliminary reading on the consumer sentiment index for July came in at 93.3, down from the final June reading of 96.1. Economists expected the index to edge down to 96.0.

Eurozone construction output increased in May after falling in the previous month, figures from Eurostat showed Friday. Construction output climbed 0.3 percent month-over-month in May, reversing a 0.2 percent decrease in April, which was revised from a 0.3 percent hike reported earlier.

The leading economic index in the UK, which measures the future economic activity, decreased in May, results of a survey by the Conference Board showed Thursday. The Conference Board leading economic index fell 0.4 percent in May, following a 0.3 percent climb in April.