U.S. crude ends 4-day skid amid weaker dollar, but ends July down 13%
Crude futures inched up on Friday after hitting a $40 handle for the first time since April, ending the month sharply lower one day after entering a bear market due to renewed concerns of global oversupply.
On the New York Mercantile Exchange, WTI crude for September delivery traded between $40.58 and $41.66 a barrel before closing at $41.52, up 0.38 or 0.92% on the session. Despite halting a four-day losing streak, WTI crude still ended July down roughly 13% on the month.On the Intercontinental Exchange (ICE), brent crude for October delivery wavered between $42.52 and $43.60 a barrel, before settling at $43.47, up 0.24 or 0.56% on the day.
Oil futures bounced off three-month lows on Friday, as the U.S. Dollar fell sharply amid weak GDP data and a soaring Yen. It came after the Bank of Japan rattled markets by approving only modest easing measures at a highly-anticipated meeting in Tokyo. Heading into the monetary policy meeting, the BOJ was widely expected to cut interest rates and expand Quantitative Easing in an effort to boost persistently sluggish inflation. The BOJ also ignored calls from the Japanese government to use all the tools necessary to lower the Yen in order to jumpstart soft exports. As a result, the Dollar plunged more than 2.5% against the Yen to an intraday-low of 102.12, its lowest level in nearly three weeks.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 1% on Friday to an intraday low of 95.67. The index is on pace for its fifth straight losing session after hitting four-month highs at 97.62 on Monday. Dollar-denominated commodities such as Crude become more expensive for foreign purchasers when the dollar appreciates.
Shares in Exxon Mobil Corporation (NYSE:XOM) fell sharply after the multinational oil and gas giant badly missed analysts' earnings forecasts last quarter. On Friday, ExxonMobil reported earnings of $1.7 billion or 0.41 per share, its worst quarterly profit since 1999. For the quarter, net profits tumbled 59% on an annual basis due to the low cost of oil.
Crude prices have come under pressure in recent weeks, as oil companies in Canada, Nigeria and Libya continue to return online. Over the spring, a wave of production disruptions in the aforementioned countries cushioned oil from further losses after a comprehensive Doha agreement in April abruptly collapsed. Despite reports from the International Energy Agency (IEA) that the imbalance in the global supply-demand could be on the verge of leveling off, data released this week has shown otherwise.
On Wednesday, the U.S. Department of Energy reported an unexpected inventory build of 1.7 million barrels last week pushing stockpiles to 521.1 million barrels, near record-highs for this time of the year. U.S. production, meanwhile, moved higher for a third consecutive week.