By Yasin Ebrahim
Investing.com – Crude oil prices slumped Friday, settling near three-month lows as signs thst US energy firms are looking to increase output, added to concerns about a possible glut in crude supply just as the Delta variant weighs on demand.
On the New York Mercantile Exchange for September delivery fell by 52 cents to settle at $62.98 a barrel, while on London’s Intercontinental Exchange (NYSE:), slipped 0.7% to trade at $65.93 a barrel.
Oilfield services firm Barker Hughes reported its weekly U.S. rig count rose by 8 to 405.
Rising rig counts, pointing to signs of tightening crude output, did little to calm worries that demand could outstrip supply as China, the world’s largest energy consumer, is showing signs of slowing growth amid restrictions to curb the Delta variant.
China earlier this week reported weaker-than-expected industrials and retail data. Data in China showing daily crude processing in July fell to its lowest level in 14 months, exacerbated worries over demand outlook.
The weakening outlook on demand appears to have dividend opinion on the whether a supply glut is on the horizon.
“Our base-case remains that this will remain a transient demand hit, with structural supply underinvestment increasingly clear,” Goldman Sachs (NYSE:) said in a note, forecasting that the oil market deficit will persist through year-end.
Others, however, pointing to OPEC and its allies’ plan to raise production, say supply could outstrip demand in the back of half of the year.
“By our calculations, the oil market will already show a slight supply surplus in the second half year if OPEC+ raises production by 400,000 barrels per day each month as planned and returns to 100% compliance,” Commerzbank (DE:) said in a note.
As well as souring outlook on energy demand, dollar strength played a role in the 6% weekly loss in oil prices after the Federal Reserve signaled it could taper its monthly bond purchases by year-end.
The dollar’s ascendency, however, is unlikely to come to an end anytime soon.
“I’m pretty constructive on the ,” “In April and May the dollar pulled back a pretty decent amount and almost returned to the lows from earlier in the year, but didn’t quite do it and now you’re actually rotating back above the march high which I think is significant,” Chief Market Strategist David Keller at StockCharts.com told Investing.com in an interview on Friday.
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by : Investing.com