Forex Pros — Last week saw crude oil prices tumble to a four-month low on Friday, after the International Energy Agency announced that it would release additional supplies from strategic reserves, while a stronger U.S. dollar also weighed.
On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded at USD91.28 a barrel by close of trade on Friday, dropping 2.05% over the week.
It earlier fell to USD89.86 a barrel, the lowest price since February 18.
The IEA said Thursday that it would release 60 million barrels of oil from emergency reserves in response to loss of supplies from Libya, with the U.S. Department of Energy contributing 30 million barrels to the cause.
The Paris-based group said that two million barrels of oil would be released per day over the next 30 days, starting from “around the end of next week.”
It was only the third time since the agency was founded in 1974 that the IEA has tapped the use of emergency stockpiles. The first was during the 1991 Persian Gulf War and the second was after Hurricane Katrina in 2005.
Influential Wall Street investment banks Goldman Sachs and JP Morgan both cut their third quarter oil price forecast following the IEA decision, with JPM slashing its projection by 23% to USD100 barrel and Goldman expecting prices to average USD105 a barrel
Meanwhile, ongoing concerns over Greece’s debt woes saw the U.S. dollar strengthen, making dollar-denominated oil futures contracts more expensive for buyers holding other currencies.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, rose 0.65% on the week to settle at 76.08, after earlier rising to 76.69, the highest since June 16.
Worries about the global economic outlook, especially in top oil consumers the U.S. and China, also weighed on prices.
The Federal Reserve on Wednesday trimmed its view on economic growth, while data on Thursday showed that China’s purchasing managers’ index fell to an 11-month low of 50.1 in June.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery traded at USD105.66 a barrel by close of trade on Friday, the lowest price since February 18.
The Brent contract sank 6.45% on the week and was up USD14.38 on its U.S. counterpart, the smallest gap between the two contracts since May 25.