Oil prices up for seventh straight session
Oil prices rose for the seventh straight session on Friday due to a weaker US dollar and data showing stronger demand from China and Baker Hughes reported a drop in the US rig count for the first time since January.
Despite the boost, oil prices were set for the biggest first-half decline since 1998.
In quiet trading ahead of the US Fourth of July weekend, Brent crude futures were up 52 cents to $47.94/barrel by 1:20 p.m. EDT and US crude futures rose 81 cents to $45.74/barrel.
Both benchmarks were on target for over 5 per cent increases compared to last week.
According to Reuters, during the first half of 1998, oil prices fell about 19 per cent. In the past, oil prices have generally increased during the first half of the year.
In the first half of this year, Brent crude is down 16 per cent.
On Friday, data from the Chinese government showed factories grew at the fastest pace in three months, according to the Purchasing Manager’s Index.
“Good PMI data from China certainly gives you hope that demand is growing globally,” Rob Haworth, senior investment strategist at U.S. Bank Wealth Management told Reuters.
Also boosting oil prices was a falling US dollar that dropped to its lowest since October during early trading, making greenback-dominated crude less expensive for investors using other currencies.
Baker Hughes reported the US rig count fell by two last week, landing at 756, more than double the 341 rigs operational at this time last year.
Last week, crude hit a 10-month low on concerns over rising production and the global glut. US, Nigerian and Libyan oil production have increased, which has led to speculators cutting their long positions in recent weeks and traders building short positions, according to Haworth.
In a monthly oil price poll by Reuters, analysts have dropped their price forecasts by over $2 for both Brent and WTI since last month.
Bank of America Merrill Lynch analysts also cut their forecast for average 2017 Brent crude prices to $50/barrel from $54/barrel and WTI to $47/barrel from $52/barrel.
They say increased production from Libya, Nigeria and US shale plays along with weaker demand growth will likely sustain the global crude glut.
