Forexpros – Crude oil futures traded below USD98 a barrel on Friday, pulling further away from the previous session’s six-month high as lingering concerns over the debt crisis in the euro zone prompted investors to sell their positions and lock in gains.
On the New York Mercantile Exchange, light sweet crude futures for delivery in January traded at USD97.64 a barrel by close of trade on Friday, dropping 1.48% over the week, the first weekly decline since late September.
Earlier Friday, prices fell to USD96.69 a barrel, the lowest since November 1 as concerns over the fiscal health of Italy and Spain continued to damp sentiment, driving investors out of riskier assets, such as stocks and commodities.
Italian bond yields eased back below the 7% threshold widely seen as unsustainable for borrowing in the long term, after newly-appointed Italian Prime Minister Mario Monti won a parliamentary confidence vote on Friday.
Meanwhile, Spanish bond yields also declined after rising close to 7% at a government bond auction earlier in the week, as the ECB purchased Italian and Spanish government debt.
However, concerns remained ahead of Sunday’s general election in Spain.
On Thursday, crude prices surged to USD103.35 a barrel, the highest since May 31 as news of the reversal of a major U.S. oil pipeline boosted hopes that a supply glut in the U.S. will be eased.
Enbridge, Canada’s largest transporter of crude oil, said that it planned to reverse the flow of the Seaway Crude Pipeline that moves oil from the Gulf of Mexico to Cushing, Oklahoma, the delivery point of the benchmark NYMEX oil.
However, Bank of America said in a report Friday that, “In the short term, this will definitely clear some of the crude out of Oklahoma, but it may not be enough to eliminate the glut in the Midwest because output is growing by hundreds of thousands of barrels a year.”
Weekly data from the U.S. Energy Information Administration released Wednesday showed that U.S. crude oil inventories fell by 1.1 million barrels last week to 337.0 million barrels, remaining in the upper limit of the average range for this time of year.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for January delivery settled at USD107.60 a barrel by close of trade on Friday. The Brent contract tumbled 4.95% over the week, with the spread between the Brent and the crude contracts standing at USD9.96 a barrel.
The gap between the two contracts is well off the record high of USD27.88 a barrel it hit in mid-October.
Brent prices have come under pressure in recent sessions as oil output has improved in the North Sea and Libya.
In the week ahead, investors will be keeping a close eye on developments within the euro zone. Meanwhile, U.S. data on third quarter growth and durable goods orders will be closely watched, in order to gauge the strength of the country’s economic recovery.
Forexpros
