Crude oil futures - Weekly outlook: June 3 - 7

Investing.com - New York-traded crude oil futures ended Friday’s session sharply lower, hitting the lowest level in a month, as a broadly stronger U.S. dollar and steep losses in U.S. equities markets dampened the appeal of the commodity.

U.S. shares and crude oil have traded in tandem in recent weeks, on the belief share prices act as a proxy for economic sentiment and are a bellwether for oil demand.

On the New York Mercantile Exchange, light sweet crude futures for delivery in July plunged 2.1% Friday to settle the week at USD91.65 a barrel by close of trade.

Earlier in the session, oil prices hit a low of USD91.57 a barrel, the weakest level since May 2. On the week, Nymex oil futures lost 2.35%, the second consecutive weekly decline.

Oil prices struggled for upside traction due to a broadly stronger U.S. dollar, as dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, gained 0.3% on Friday to settle the week at 83.32.

The University of Michigan said Friday its consumer sentiment index rose to 84.5 in May, its highest level since July 2007, from76.4 in April and up from a preliminary estimate of 83.7.

A separate report showed that manufacturing activity in the Chicago-area improved at the fastest pace in over a year last month.

Market research group Kingsbury International said its Chicago purchasing managers’ index jumped to a seasonally adjusted 58.7 in May from a reading of 49.0 in April. Analysts expected a reading of 50.3

The robust data bolstered expectations that the Federal Reserve could begin to scale back its USD85 billion a month asset purchase program this year.

The reports came after the Commerce Department said U.S. consumer spending fell 0.2% in April, confounding expectations for a 0.2% increase, as personal income stagnated.

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

Also Friday, the Organization of the Petroleum Exporting Countries decided to leave global output quotas unchanged at 30 million barrels per day for the third consecutive meeting, as widely expected.

Ministers from the 12-member group will next gather on December 4.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for July tumbled 2% on Friday to settle the week at USD100.11 a barrel, the weakest level since May 2.

The London-traded Brent contract lost 2.45% over the week, while the spread between the Brent and the crude contracts stood at USD8.46 a barrel.

In the week ahead, investors will be awaiting the release of Friday’s closely watched report on U.S. nonfarm payrolls for further hints regarding the direction of U.S. monetary policy.

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