Forexpros – Crude oil prices posted their third consecutive weekly gain last week as expectations for further declines in the U.S. dollar boosted the appeal of commodities, while a disruption to U.S. supplies also lent support.
On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded at USD97.72 a barrel by close of trade on Friday, gaining 1.6% over the week.
The August contract rose to USD99.18 on Tuesday, the highest price since July 7, when prices rose to USD99.40 a barrel.
The greenback came under pressure amid mounting worries over a potential U.S. sovereign debt default after ratings agency Standard & Poor’s said late Thursday that the U.S. faced a 50% chance of a credit rating downgrade within the next 90 days, citing the political debate over raising the country’s USD14.3 trillion debt ceiling before the August 2 deadline.
The warning came a day after rival Moody’s Investors Service said it put the U.S. government’s Aaa bond rating on review for possible downgrade due to a “small but rising risk” of a short-lived default.
Republicans in the House of Representatives said they would vote next week on a bill to raise the U.S. debt ceiling as long as Congress adopts a balanced-budget amendment, an unlikely prospect.
Meanwhile, data on Friday showed that manufacturing activity in the New York-region unexpectedly contracted for a second month in July, while U.S. consumer sentiment in early July fell to its lowest since March 2009.
A separate report showed that U.S. industrial production rose less-than-expected in June.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, shed 0.21% over the week to trade at 75.41, after dropping to a one-week low of 75.04 on Thursday.
Oil prices typically strengthen when the U.S. currency weakens as the dollar-priced commodity becomes cheaper for holders of other currencies.
Global financial service provider HSBC said on Friday that, “The worse things get in the U.S., the lower the dollar is relatively, which boosts oil prices. Also if things get incredibly bad in the U.S. then QE3 becomes a possibility and this additional money would also likely boost oil prices as it searches for a home.”
Testifying before Congress, Federal Reserve Chairman Ben Bernanke said on Thursday that the central bank was prepared to provider additional stimulus if the U.S. recovery faltered, but made clear the Fed was not at that point.
Crude prices were also lifted after pipeline operator TransCanada said it would reduce nominated crude volumes on its 591,000-barrel-a-day Keystone pipeline to the U.S. from Canada by 20% in August as it worked on the line following two spills in May.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for September delivery traded at USD117.64 a barrel by close of trade on Friday, dipping 0.5% over the week and up USD19.92 on its U.S. counterpart.