Investing.com -- U.S. crude futures extended losses from the prior two sessions on Friday to slump to fresh seven-year lows, as crashing oil prices showed little signs of stabilizing following a modest increase in domestic oil rigs last week.
Energy traders also reacted to news that the U.S. Congress approved a sweeping $1.1 trillion spending bill, which includes the repeal of a four-decade ban on crude exports. The ban had been in place since 1975, when Congress approved the Energy Policy and Conservation Act to boost domestic supply in response to a global oil crisis started that had persisted for two years.
On the New York Mercantile Exchange, WTI crude for January delivery traded between $34.29 and $35.56 a barrel before closing at $34.72, down 0.23 or 0.66% on the session. At Friday's session lows, the front month contract for U.S. crude fell slightly below Monday's intraday low of $34.53 when WTI crude slipped below $35 a barrel for the first time since 2008. U.S. crude futures are now approaching $32 a barrel, a level not seen in 12 years when the domestic oil market staged a slow, multi-year recovery from the effects of the September 11 terrorist attacks.
On the Intercontinental Exchange (ICE), brent crude for February delivery wavered between $36.42 and $37.72 a barrel before settling at $36.89, down 0.26 or 0.70% on the day. In Friday's morning session, North Brent Sea futures tested 11-year lows from mid-2004 when it traded at $36.20. With the losses, crude futures completed their third consecutive weekly loss.
Both the international and U.S. domestic benchmarks of crude are down by more than 17% since OPEC opted to leave its output quota unchanged two weeks ago at a closely-watched meeting in Vienna.
Oil services firm Baker Hughes (N:BHI) said in its weekly rig count on Friday that U.S. oil rigs rose by 17 to 541 last week for the week ending on December 11. A week earlier, the rig count fell by 21 to 524, its sharpest drop in two months. Any increase in the rig count provides a lagging indicator that U.S. crude production could be on the rise.
Separately, a bearish report from Genscape, Inc. provided few indications that U.S. crude inventory levels are close to abating from near-record highs. Genscape, a leading global provider of energy data to commodity markets, said Thursday that stockpiles last week at the Cushing Oil Hub in Oklahoma increased by 1.4 million barrels. Cushing is the main delivery point for Nymex crude oil.
A day earlier, the U.S. Energy Information Administration (EIA) said U.S. commercial crude inventories rose by 4.8 million barrels last week to 490.7 million barrels, its highest level in at least 80 years. Oil prices worldwide have plunged more than 50% since OPEC roiled global markets last November with its strategic decision to maintain its production ceiling at a level above 30 million barrels per day. The tactic triggered a prolonged battle between Saudi Arabia and high-priced U.S. shale producers for market share, flooding global markets with a glut of oversupply.
Many energy analysts have expressed little confidence that the current supply-demand imbalance can be corrected in the near-term. Last week, the influential Paris-based International Energy Agency (IEA) said in its December Oil Market report that it expects global demand to increase by 1.2 million bpd in 2016, down from previous estimates for demand growth of 1.8 million bpd.
Meanwhile, the U.S. Senate and House of Representatives each passed an emergency spending measure on Friday, which contains a provision that rescinds the 40-year old export ban. U.S. president Barack Obama has indicated that he will sign the bill into law. An elimination of the export ban will create an estimated 1 million American jobs, resulting in an additional $170 billion for the U.S. economy, House speaker Paul Ryan said earlier this week.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell by more than 0.30% on Friday morning to an intraday low of 98.72. The index eclipsed 100.00 at the start of December to reach a 12-month high.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.