Investing.com - Oil prices ended Friday’s session close to the lowest level in more than a decade as lingering concerns over China’s economic outlook added to the view that a global supply glut may stick around for much longer than anticipated.
On the ICE Futures Exchange in London, Brent oil for February delivery shed 20 cents, or 0.59%, on Friday to close the week at $33.55 a barrel after sinking to $32.16 on Thursday, the lowest since April 2004.
On the week, London-traded Brent futures tumbled $4.30, or 10.01%, as a meltdown on China’s stock market and a rapid depreciation of the yuan rattled investor sentiment.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.
Elsewhere, on the New York Mercantile Exchange, crude oil for delivery in February dipped 11 cents, or 0.33%, to close the week at $33.16 a barrel. On Thursday, Nymex prices fell to $32.10, a level not seen since December 2003.
For the week, New York-traded oil futures plunged $4.44, or 10.48%, its 11th losing week of the last 13.
Prices showed little reaction after industry research group Baker Hughes said late Friday that the number of rigs drilling for oil in the U.S. decreased by 20 to 516 last week. Despite the declining rig count, U.S. production levels remain near record-high levels.
Meanwhile, Brent's premium to the West Texas Intermediate crude contract stood at 39 cents, compared to a gap of 48 cents by close of trade on Thursday.
Global crude production is outpacing demand following a boom in U.S. shale oil and after a decision by the Organization of the Petroleum Exporting Countries last year not to cut production in order to defend market share.
Most market analysts expect a global glut to worsen this year due to soaring production in North America, Saudi Arabia and Russia.
Oversupply issue will be exacerbated further once Iran returns to the global oil market early next year after western-imposed sanctions are lifted. Analysts say the country could quickly ramp up production by around 500,000 barrels, adding to the glut of oil that has sent prices tumbling.
Oil also came under pressure Friday from a broadly stronger U.S. dollar. The greenback gained after the Labor Department reported that the U.S. economy added 292,000 jobs last month, easily surpassing forecasts of 200,000.
Dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains.
In the week ahead, investors will continue to focus on economic reports out of China, with Wednesday’s trade data in the spotlight.
Meanwhile, the U.S. is to release data on retail sales and producer prices as market players look for further indications on the strength of the economy and the future path of rate hikes.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday
Tuesday, January 12
The American Petroleum Institute, an industry group, is to publish its weekly report on U.S. oil supplies.
Wednesday, January 13
China is to produce data on the trade balance.
The U.S. Energy Information Administration is to release its weekly report on oil supplies.
Thursday, January 14
The Bank of England is to announce its latest monetary policy decision and publish the minutes of its policy meeting.
The European Central Bank is to publish the minutes of its December monetary policy meeting.
Later in the day, the U.S. is to produce data on initial jobless claims.
Friday, January 15
The U.S. is to round up the week with reports on retail sales, industrial production and producer price inflation, as well as preliminary data on consumer sentiment.
Also Friday, Baker Hughes will release weekly data on the U.S. oil rig count.