HOUSTON, May 25 (Xinhua) -- Oil prices lost ground for the week ending May 24, with the price of West Texas Intermediate (WTI) for July delivery down 6.58 percent and Brent crude oil for July delivery down 4.87 percent, which were thought to be mainly caused by investors' concern over less oil demand.
WTI closed the week at 58.63 U.S. dollars a barrel on the New York Mercantile Exchange, while Brent crude finished the week at 68.69 dollars a barrel on the London ICE Futures Exchange. WTI and Brent have increased 29.11 percent and 27.68 percent, respectively, so far this year.
During the week, WTI and Brent ended mixed on Monday and Tuesday. The mixed endings were mainly due to the news about the Middle East that could have an impact on global oil balances.
For the rest of the week, WTI and Brent moved in the same direction. The decrease of oil prices showed that oil traders were more concerned about the slowing global economy and less oil demand which are mainly due to escalating trade tensions between China and the United States.
On Monday, oil prices settled mixed with WTI up 0.34 dollar to settle at 63.1 dollars a barrel, while Brent crude falling 0.24 dollar to close at 71.97 dollars a barrel. Saudi Arabia and other major oil exporters signaled to extend the current production-cut agreement until year-end. Meanwhile, a South Sudan senior official said that Saudi Arabia will provide technical assistance to its oil sector which is seeking recovery after more than five years of conflict.
Oil prices settled mixed again on Tuesday as growing tensions in the Middle East pose a challenge to the stability of global crude oil markets. WTI decreased 0.11 dollar to settle at 62.99 dollars a barrel, while Brent crude rose 0.31 dollars to close at 72.18 dollars a barrel.
On Wednesday, oil prices settled lower after a report showed an unexpected build in U.S. crude stockpiles. WTI was down 1.71 dollars to settle at 61.42 dollars a barrel, while Brent crude fell 1.19 dollars to close at 70.99 dollars a barrel.
U.S. commercial crude inventories increased by 4.7 million barrels in the week ending May 17, the U.S. Energy Information Administration reported. Investors were worried that increasing U.S. stockpiles combined with prolonged tensions between the United States and its major trading partners would dampen market sentiment.
On Thursday, oil prices plunged as disappointing U.S. manufacturing data and lingering global trade tensions led to investors' concerns over slow global economic growth and less crude demand. WTI plummeted 3.51 dollar to settle at 57.91 dollars a barrel, while Brent crude dropped 3.23 dollars to close at 67.76 dollars a barrel.
It was the worst trading day for crude oil since the beginning of the year and after the start of OPEC production cuts in December, as the escalating U.S.-China trade disputes and huge crude pileups from weak refiner demand combined to roil the market.
Oil prices rebounded on Friday as U.S. oil rigs slid this week, offsetting concerns over rising U.S. crude stockpiles. WTI increased 0.72 dollar to settle at 58.63 dollars a barrel, while Brent crude rose 0.93 dollar to close at 68.69 dollars a barrel.
Oil prices have kept gaining momentum since the start of the year due to some geopolitical concerns. The momentum has slowed down recently, mainly because of the concerns over downturn in demand for crude oil, but it gained ground in the weeks ending May 10 and May 17.
The slowing global economy is a major headwind for crude oil. The slower economic growth of the world, mainly due to the ongoing trade tensions between China and the United States, will lead to less demand for oil, which, in turn, would put downward pressure on oil prices.
Moreover, a rising U.S. dollar in the past months has dragged down the greenback-denominated crude futures, as the U.S. Dollar Index has been keeping uptrend since mid-2018. U.S. Dollar Index closed the week at 97.61 level.
The U.S. Dollar Index is a measure of the value of the U.S. dollar relative to a basket of foreign currencies. Oil is mostly traded in dollars all over the world and a stronger dollar pressures the oil demand.
In the near future, demand growth and geopolitical issues remain as important factors for oil prices. Both OPEC and the International Energy Agency believe the world oil demand will keep uptrend in coming years, although OPEC has revised down demand growth of the world oil market.
In the coming week, analysts believe the relations between the United States and Iran and the ongoing production cuts by OPEC and Russia will continue to play their roles in tightening the global supplies, in turn, giving a boost to the prices.
Meanwhile, the Memorial Day weekend staring Saturday kicks off the peak summer road travel period in the United States. Some forecasters remain optimistic that the holiday will help the oil prices to come back especially if the weekend travel lives up to expectations.
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