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Crude oil futures - Weekly outlook: August 19 - 23

Published 08/18/2013, 08:10 AM
Updated 08/18/2013, 08:10 AM
Investing.com - New York-traded crude oil futures ended Friday’s session at a two-week high, as ongoing violence in Egypt fuelled concerns over a disruption to supplies from the Middle East.

Countries in the Middle East and North Africa were responsible for 36% of global oil production and held 52% of proved reserves in 2012.

On the New York Mercantile Exchange, light sweet crude futures for delivery in October inched up 0.1% Friday to settle the week at USD107.29 a barrel by close of trade.

Earlier in the session oil prices hit USD107.95 a barrel, the highest level since June 18.

Oil futures were likely to find support at USD105.01 a barrel, the low from August 12 and resistance at USD108.74 a barrel, the high from August 2.

Nymex oil futures rose 1.1% on the week.

Prices rose in wake of bloody clashes between supporters of Egypt's ousted President Mohamed Morsi and Egyptian security forces, which stoked fears that tensions may spread and involve the country's oil-rich neighbors or disrupt the flow of crude through the Suez Canal.

Egypt declared a month-long national state of emergency on Wednesday after nearly 600 people died and at least 2,000 were injured across the country as police forces cracked down on Muslim Brotherhood protesters.

Tension between the government and supporters of former President Mohammed Morsi has been running high ever since Morsi was ousted from power in July in what various media outlets reported as a military coup.

But gains were limited after a series of downbeat U.S. economic data fuelled concerns over the strength of the U.S. economy.

The University of Michigan said its consumer sentiment index fell from a six-year high of 85.1 in July to 80.0 in August. Economists had expected the index to tick up to 85.5.

Separate reports showed that U.S. housing starts rose less-than-expected in July and building permits also fell short of expectations last month.

The U.S. is the world’s biggest oil consuming country, responsible for almost 22% of global oil demand.

In the week ahead, investors will be looking ahead to Wednesday’s minutes of the Federal Reserve’s most recent meeting, while U.S. data on initial jobless claims and the housing sector will also be closely watched.

Oil traders have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Fed to reduce its bond purchases.

Any improvement in the U.S. economy was likely to reinforce the view that the central bank will begin to taper its bond purchase program in the coming months.

The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for October delivery rose 0.95% on Friday to settle the week at USD110.62 a barrel.

Earlier in the session Brent prices hit USD110.70 a barrel, the highest level since April 2.

The London-traded Brent contract added 2.15% over the week, while the spread between the Brent and the crude contracts stood at USD3.33 a barrel by close of trade on Friday.

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