Crude oil futures tumbled Friday, extending weekly losses amid lingering concerns about the global supply glut.
OPEC is having difficulty getting full compliance on its supply quotas and North American production has been rampant in the first half of the year.
“If OPEC doesn’t balance the market, the oil price will have to force it somewhere else, most likely in U.S. shale. For a chance of a balanced market in 2018, the U.S. rig count can no longer grow and possibly needs to contract ~150 rigs. Given current break-evens, this requires WTI between $46-50,” the Morgan Stanley analysts said in the report.
Alas, Baker Hughes reported that the number of active U.S. rigs drilling for oil rose by 7 to 763 rigs this week, the 24th weekly rise in 25 weeks.
August West Texas Intermediate crude fell $1.29, or 2.8%, to settle at $44.23 a barrel on the New York Mercantile Exchange for the session. Prices plunged 3.9 percent this week, sliding back near recent yearly lows.
In economic news, the U.S. created 222,000 new jobs in June. Economists predicted a 180,000 increase in nonfarm jobs. This follows an upwardly revised increase of 152,000 jobs in May. The unemployment rate rose to 4.4% from 4.3% as more people entered the labor force for the summer.
The material has been provided by InstaForex Company – www.instaforex.com