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Crude oil futures - Weekly outlook: August 12 - 16

Published 08/11/2013, 07:18 AM
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Investing.com - New York-traded crude oil futures ended Friday’s session higher, as appetite for growth-linked assets improved after data showed that Chinese industrial output rose more-than-forecast in July, easing concerns over a slowdown in the world’s second-largest economy.  

On the New York Mercantile Exchange, light sweet crude futures for delivery in September rallied 2.7% Friday to settle the week at USD106.17 a barrel by close of trade.

Oil prices were boosted after official data showed that Chinese industrial output rose significantly more-than-forecast in July and consumer price inflation remained unchanged.

Industrial production in China rose 9.7% last month, beating expectations for a 9.0% increase and picking up from a gain of 8.9% in June.

In another report, the National Bureau of Statistics said CPI remained unchanged at 2.7% last month. Analysts expected a July reading of 2.8%.

Chinese trade data released Thursday showed that both imports and exports rose in July, easing concerns over a slowdown in the world’s second-largest economy.

China said it imported 26.11 million metric tons of crude oil in July, 20% more than the same period last year.

China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.

Despite Friday’s upbeat performance, oil prices lost 0.6% on the week amid ongoing speculation over how soon the Federal Reserve may start to pull back its asset purchase program.

Comments by senior Fed officials, including the heads of the Federal Reserve Banks of Chicago and Dallas, indicated that the U.S. central bank could begin to scale back its asset purchase program as early as next month if the economy continues to pick up.

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.

In the week ahead, investors will be closely watching U.S. data on retail sales and consumer inflation, as well as reports from the housing and manufacturing sectors.

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

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for September delivery rose 1.4% on Friday to settle the week at USD108.22 a barrel.

Despite Friday’s gains, the London-traded Brent contract fell 0.65% over the week, while the spread between the Brent and the crude contracts stood at USD2.05 a barrel by close of trade on Friday.

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