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Crude continues retreat from yearly-high reached earlier in the week

Published 05/08/2015, 02:37 PM
Updated 05/08/2015, 02:46 PM
WTI crude moved above $59 a barrel on Friday, while brent stayed above $65

Investing.com -- Crude futures were mixed on Friday moving slightly lower on the week, following an inconsequential U.S. jobs report and an unexpected result in the UK general elections.

Supply data also remained in focus, amid further U.S. rig decline -- albeit at a slower pace than a precipitous fall earlier in the winter.

On the New York Mercantile Exchange, WTI crude for June delivery rose slightly by 0.45 or 0.76% to 59.39, after reaching a five-month high above $62 a barrel earlier this week. For the week, Texas Light Sweet crude inched lower after opening at $59.79 on Monday. WTI crude futures were relatively unchanged after oil services firm Baker Hughes (NYSE:BHI) released its weekly U.S. rig count on Friday afternoon.

Last week, the number of oil rigs in the U.S. fell by 11 to 668 marking the 22nd consecutive week of declines. The number of domestic oil rigs in the U.S. remained at its lowest level since September, 2010. The pace of decline, however, continues to slow. In April, rigs were eliminated on average by 33 per week after dipping by more than 80 on consecutive weeks in February. Last October, the rig count peaked above 1,600, after reaching 1,528 at this point last year.

Crude production, meanwhile, continues to level off amid a glut of supply. Last week, the U.S. produced approximately 9.369 million barrels per day down from roughly 9.422 million in mid-March. In turn, crude prices have spiked as inventory levels moved lower for the first time this year. Earlier in the spring it became increasing likely that the U.S. would reach full storage capacity at some point this month.

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The U.S. Department of Labor said on Friday that nonfarm payrolls for the month of April increased by 223,000, slightly above forecasts for a 220,000 gain. The unemployment rate, meanwhile, fell by 0.1% to 5.4%, its lowest level since May, 2008 before the Financial Crisis. Nonfarm payrolls for March were also revised downward to 85,000 from an already paltry reading of 126,000.

As a result, the U.S. Dollar Index remained flat in U.S. afternoon trading at 94.73. The index measures the strength of the greenback versus a basket of six other major currencies.

On the Intercontinental Exchange (ICE), brent crude for June delivery fell 0.11 or 0.17% to 65.43. The spread between the international and U.S. domestic benchmarks of crude stood at 6.04, down from 6.57 on Thursday.

Dollar-denominated commodities such as brent become more expensive for foreign purchasers when the dollar appreciates.

In the United Kingdom prime minister David Cameron surprisingly posted a resounding victory on Thursday night in the British general election, as his Conservative party added 28 seats to boost its majority to 331. Throughout the year, polls indicated the possibility of a hung parliament in which no party would gain majority control. Cameron promised voters a referendum on the UK's membership in the European Union if elected.

GBP/USD gained 1.31% to 1.544 in U.S. afternoon trading, while EUR/USD was down 0.58% to 1.12.

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