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Crude oil futures - Weekly outlook: April 15 - 19

CommoditiesApr 14, 2013 06:33AM ET
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Investing.com - New York-traded crude oil futures ended Friday’s session sharply lower at a five-week low, after a weaker-than-forecast U.S. retail sales data fuelled fears that the economic recovery is losing momentum, reducing hopes for higher oil demand in the world’s largest energy consumer.

On the New York Mercantile Exchange, light sweet crude futures for delivery in May tumbled 2.8% Friday to settle the week at USD90.82 a barrel by close of trade.

Nymex oil prices fell to a session low of USD90.26 earlier in the session, the weakest level since March 7. On the week, New York-traded oil futures lost 2.35%, the second consecutive weekly decline.

Oil prices came under heavy selling pressure after the U.S. Commerce Department said retail sales fell 0.4% in March, the largest decline in nine months and missing expectations for a 0.1% increase.

A separate report showed that the preliminary reading of the University of Michigan’s consumer sentiment index fell to 72.3 in April, the lowest level since July, from a final reading of 78.6 in March.

Concerns over the energy demand outlook in the U.S. were underlined after a government report showed that oil supplies rose to the highest level since July 1990 last week.

U.S. crude oil inventories increased by 0.3 million barrels last week to hit 388.9 million, dampening hopes of a robust recovery in oil demand from the world’s largest oil consumer.

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

Oil prices were lower earlier in the week amid concerns over the global economic outlook and the impact on future oil demand prospects.

The International Energy Agency cut its global oil demand forecast for 2013 for the third consecutive month on Thursday. The agency reduced its estimate for global oil consumption by 45,000 barrels a day to 795,000 barrels a day, citing weakening demand in Europe.

The IEA forecast comes one day after the Organization of the Petroleum Exporting Countries cut its global oil demand estimate for the second time in two months on Wednesday.

OPEC lowered its world oil-demand growth forecast by 40,000 barrels a day to 800,000 barrels in 2013.

In the week ahead, the U.S. is to publish a broad range of economic data, with reports on manufacturing activity, the housing sector and inflation due for release.

Investors will be closely watching this data as they attempt to gauge the strength of the U.S. recovery.

Market participants will also be watching data a flurry of Chinese economic reports due this week to gauge the strength of the world’s second largest economy.

China is to release official data on first quarter gross domestic product on Monday. Beijing is also to release government data on retail sales, industrial production and fixed asset investment.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for May delivery lost 1.35% on Friday to settle the week at USD103.11 a barrel. Earlier in the session, Brent prices fell to a session low of USD101.09 a barrel, the weakest level since July 16.

The London-traded Brent contract lost 1.2% over the week, while the spread between the Brent and the crude contracts stood at USD12.29 a barrel.

The spread between the two contracts fell to a 15-month low earlier in the week, due to an improving production outlook in the North Sea and amid growing concerns over the euro zone’s economic outlook.

Crude oil futures - Weekly outlook: April 15 - 19

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