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Crude oil futures - weekly outlook: October 19 -23

Published 10/18/2015, 07:43 AM
© Reuters.  Oil gains on Friday, but ends with a nearly 5% weekly loss
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Investing.com - Crude oil futures rebounded after four days of sharp losses on Friday, amid indications U.S. oil drillers are cutting back on production following a collapse in prices over the summer.

On the New York Mercantile Exchange, crude oil for delivery in November jumped 88 cents, or 1.9%, to end Friday's session at $47.26 a barrel.

Industry research group Baker Hughes (N:BHI) said late Friday that the number of rigs drilling for oil in the U.S. decreased by 10 last week to 595, the seventh straight weekly decline. Over the prior six weeks, drillers had cut 70 rigs.

A lower U.S. rig count is usually a bullish sign for oil as it signals potentially lower production in the future.

Despite Friday's gains, New York-traded oil futures tumbled $2.25, or 4.78%, on the week, as mostly bearish outlooks for supply and demand and for the global economy remained on investors' minds.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for December delivery tacked on 73 cents, or 1.47%, on Friday to close the week at $50.46 a barrel.

London-traded Brent futures still lost $2.18, or 4.16%, on the week, as ongoing worries over the health of the global economy fueled concerns that a global supply glut may stick around for longer than anticipated.

The oil market has been volatile in recent months amid uncertainty about how quickly the global glut of crude is set to shrink. Despite this tighter outlook for North America, output remains robust in other countries.

Global oil production is outpacing demand following a boom in U.S. shale oil production and after a decision by the Organization of Petroleum Exporting Countries last year not to cut production.

Saudi Arabia and other Gulf OPEC members have indicated they will continue to stick to their policy of defending market share by keeping production high.

A meeting of OPEC technical experts in Vienna on October 21 may shed further light on the group's position of maintaining production at current levels as prices remain muted.

Oil prices have lost nearly 60% since last summer as lingering concerns over a glut in world markets drove down prices.

Meanwhile, the spread between the Brent and the WTI crude contracts stood at $3.20 a barrel by close of trade on Friday compared to $3.35 by close of trade on Thursday.

In the week ahead, investors will be focusing on Chinese third quarter economic growth data due on Monday amid lingering concerns over the health of the world's second biggest economy.

Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, October 19

China is to release data on third quarter economic growth as well as reports on industrial production and fixed asset investment.

Later in the day, Fed Governor Lael Brainard is to speak at an event in Chicago.

Tuesday, October 20

The U.S. is to release data on building permits and housing starts, while the American Petroleum Institute, an industry group, is to publish its weekly report on oil supplies.

Meanwhile, New York Fed President William Dudley and Fed Governor Jerome Powell are both to speak at an event in New York.

Wednesday, October 21

The U.S. is to publish a weekly government report on crude oil inventories.

Thursday, October 22

The ECB is to announce its monetary policy decision. The rate announcement will be followed by a post-policy meeting press conference with President Mario Draghi.

The U.S. is to produce data on initial jobless claims and existing home sales.

Friday, October 23

The euro zone is to release survey data on manufacturing and service sector activity.

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