Crude oil futures – weekly outlook: September 21 – 25
MTECHTIPS:- Crude oil futures fell sharply on Friday, as the Federal Reserve’s downbeat assessment about the state of the global economy hurt investor sentiment.
The Fed left short-term interest rates unchanged on Thursday, amid concerns over soft inflation and the effects of recent market volatility on the U.S. economy.
“Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term,” the FOMC said in a statement.
The central bank added that it wanted to see “some further improvement in the labor market,” and be “reasonably confident” that inflation will increase before hiking rates.
The Fed’s concerns over the uncertain outlook for global growth rattled financial markets and pressured risk-sensitive assets lower on Friday.
On the ICE Futures Exchange in London, Brent oil for November delivery tumbled $1.61, or 3.28%, to close the week at $47.47 a barrel.
For the week, London-traded Brent futures declined 61 cents, or 1.39%, the third straight weekly loss, amid ongoing concerns over sluggish global growth.
Elsewhere, on the New York Mercantile Exchange, crude oil for delivery in November plunged $2.18, or 4.62%, to end Friday’s session at $45.02 a barrel.
Industry research group Baker Hughes (NYSE:BHI) said late Friday that the number of rigs drilling for oil in the U.S. decreased by eight last week to 644, the third straight weekly decline.
New York-traded oil futures dipped 10 cents, or 0.11%, on the week, as worries over the health of the global economy added to the concerns that a global supply glut may stick around for longer than anticipated.
Crude oil prices have been under heavy selling pressure in recent months, as ongoing concerns over a glut in world markets drove down prices.
Global oil production is outpacing demand following a boom in U.S. shale oil production and after a decision by the Organization of Petroleum Exporting Countries last year not to cut production.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at $2.45 a barrel by close of trade on Friday.
In the week ahead, investors will be turning their attention to Wednesday’s index of manufacturing activity from China and surveys on private sector activity from the euro zone for a fresh indication on the strength of the global economy.