U.S. oil futures trim losses after plunging to 6-year low

Investing.com - U.S. crude oil futures trimmed losses on Monday, after hitting a six-year low earlier in the session amid ongoing concerns over a glut in supplies.

On the New York Mercantile Exchange, crude oil for delivery in April hit a session low of $43.57 a barrel, a level not seen since March 2009, before trading at $44.41 during European morning hours, down 43 cents, or 0.96%.

The May contract was down 14 cents, or 0.3%, at $46.92 after hitting an intraday low of $45.89.

On Friday, New York-traded oil prices plunged $2.21, or 4.7%, following the release of a mostly bearish report from the International Energy Agency on global oil supply and demand.

In its closely-watched monthly oil market report released Friday, the IEA warned that an oil-price recovery remained fragile amid a production rebound in the U.S.

The agency added that any appearance of stability in the oil market is tenuous. OPEC will release its own monthly report on global oil supply and demand later on Monday.

New York-traded oil futures sank $4.76, or 9.61%, last week, the fourth consecutive weekly loss and the largest since early December.

Industry research group Baker Hughes (NYSE:BHI) said Friday that the number of rigs drilling for oil in the U.S. fell by 56 last week to 866, the 14th-straight week of declines.

The number of working U.S. oil rigs is 46% lower than an all-time high of 1,609 hit in October.

Market players have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.

However, total U.S. crude oil inventories stood at 448.9 million barrels as of last week, the most in at least 80 years, indicating that cheap prices have yet to affect output.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for May delivery declined 65 cents, or 1.18%, to trade at $54.36 a barrel. Earlier in the day, prices touched $53.64, the lowest since February 2.

London-traded Brent prices slumped $2.27, or 3.96%, on Friday to close at $55.01. Brent dropped $4.95, or 8.47%, last week, the second straight weekly loss.

Meanwhile, the spread between the Brent and the WTI crude contracts stood at $7.44 a barrel, compared to $7.95 by close of trade on Friday.

Oil prices have fallen sharply in recent months as OPEC resisted calls to cut output, while the U.S. pumped at the fastest pace in more than three decades, creating a glut in global supplies.

Elsewhere, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last at 100.41 after rising to overnight peaks of 100.71, a level last reached in April 2003.

Demand for the dollar continued to be underpinned after stronger-than-forecast nonfarm payrolls report for February released earlier in the month solidified expectations for higher interest rates.

Dollar-denominated oil futures contracts tend to fall when the dollar rises, as this makes oil more expensive for buyers in other currencies.

The euro fell to 12-year lows against the greenback as diverging monetary policies in the U.S. and the euro zone continued to weigh.

Market participants were looking ahead to Wednesday’s Federal Reserve statement to see if it would drop its reference to being patient before raising rates and signal that it is ready to hike rates depending on economic data.