HOUSTON, July 27 (Xinhua) -- Oil prices edged up for the week ending July 26, with the price of West Texas Intermediate (WTI) for September delivery up 1.02 percent and Brent crude oil for September delivery up 1.58 percent.
WTI closed the week at 56.20 U.S. dollars a barrel on the New York Mercantile Exchange, while Brent crude finished the week at 63.46 dollars a barrel on the London ICE Futures Exchange. WTI and Brent crude have increased 23.76 percent and 17.96 percent, respectively, so far this year.
During the week, WTI and Brent crude moved in the same directions, recovering ground lost in the previous week, amid demand fears and inventory draws of U.S. crude oil countering one another and geopolitical shocks failing to provide solid support to prices.
Oil prices increased Monday and Tuesday as investors looked at possible supply disruptions in the Middle East. The market closely observed the latest development of U.S.-Iran frictions, raising concerns over global oil supply.
The WTI rose 0.59 and 0.55 dollar to settle at 56.22 and 56.77 dollars a barrel on Monday and Tuesday, respectively, while Brent crude gained 0.79 and 0.57 dollar to close at 63.26 and 63.83 dollars a barrel accordingly.
On Wednesday, oil prices retreated despite a decline in U.S. crude inventories last week, as investors were concerned about weakening demand. The WTI dropped 0.89 dollar to settle at 55.88 dollars a barrel, while Brent crude declined 0.65 dollar to close at 63.18 dollars a barrel.
For the week ending July 19, U.S. commercial crude oil inventories decreased by 10.8 million barrels from the previous week, more than the market forecast falls of 4.0 million barrels, implying greater demand and bullish for crude prices. However, analysts pointed out that the crude inventories decline was due to disruptions caused by a Gulf of Mexico storm earlier this month and seen as a "one-off event."
Meanwhile, on Tuesday, the International Monetary Fund (IMF) lowered its global growth forecast to 3.2 percent in 2019. In April, the agency forecast a 3.3-percent expansion in global gross domestic product (GDP), but slow growth in the first half of the year, trade and technology disputes, and uncertainty regarding Britain's withdrawal from the European Union led to the downward adjustment.
The IMF's latest World Economic Outlook report also downgraded the forecast for 2020, from 3.6 percent to 3.5 percent. The downgraded forecast caused concerns over demand for crude oil, which imposed pressures on oil prices.
On Thursday, oil prices slightly rebounded and continued to edge up on Friday, amid the bullish sentiment due to the large fall in U.S. crude inventories, and the concerns over supply due to the decline of U.S. oil rigs for the fourth consecutive week. According to Baker Hughes, a Houston-based oilfield services company, the U.S. oil rig count has fallen 11 percent this year.
The WTI increased 0.14 and 0.18 dollar to settle at 56.02 and 56.20 dollars a barrel on Thursday and Friday, respectively, while Brent crude rose 0.21 and 0.07 dollar to close at 63.39 and 63.46 dollars a barrel, accordingly.
Oil prices have kept gaining momentum since the start of the year due to some geopolitical concerns and OPEC's decision of production cut. The momentum has slowed down recently, mainly because of the concerns over downturn in demand for crude oil.
The slowing global economy continued to be a major headwind for crude oil. The slower economic growth of the world 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. For the week ending July 26, U.S. Dollar Index, breaking above 97.80 level and opening the gates to the 2019 high.
Oil is mostly traded in dollar all over the world and a stronger dollar pressures the oil demand.
Moreover, some large oilfield services companies worried about the contraction in U.S. shale. John Lindsay, CEO of Helmerich & Payne, a large U.S.-based oilfield services company, said Wednesday in a statement that the sector will see more financial pain as the pace of drilling slows down.
"The full effect of the industry's emphasis on disciplined capital spending continues to reverberate through the oil field services sector," said Lindsay, adding "we are reluctant to predict another bottom and see further softening during our fourth fiscal quarter as our guidance would indicate."