Crude oil prices lose momentum to end the first week in July as traders see continued delays in bringing balance back to the market. File photo by Monika Graff/UPI | License Photo
July 7 (UPI) -- U.S. momentum was the driver behind crude oil prices again on Friday, with the potential for more oil hammering a market that's already been on the decline.
Crude oil prices gained some ground early in the week on signs that some of the supply-side pressures from the United States were easing. Crude oil prices got some support last week when oilfield services company Baker Hughes reported a downturn in U.S. exploration and production activity, a trend that followed reports of declining production.
U.S. domestic production dipped 100,000 barrels per day last week, but the latest federal data show a slight uptick at 88,000 barrels per day. U.S. crude oil production has proven more resilient to a weaker market as operators become more efficient. This week, U.S. Interior Secretary Ryan Zinke signed off on a measure that would speed up for the process for approving permits for oil and gas work on federal land.
Meanwhile, an effort by the Organization of Petroleum Exporting Countries to balance the market with coordinated production declines is under threat from a lingering row pitting Saudi Arabia, OPEC's top producer, and its allies against Qatar. Libya and Nigeria are adding to the concerns with production gains and it could be the end of July before any formal considerations are made for those two OPEC members.
The price for Brent crude oil was down 1.73 percent at 9:05 EDT to $47.26 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 1.76 percent to $44.72 per barrel.
On the surface, data published this week from the U.S. Energy Information Administration would be bullish given the 6.3 million barrels drawn out of storage. But Geoffrey Craig, the oil futures editor for the Platts pricing service, said the devil is in the details.
"The drop in surplus stocks could be seen as a sign of tightening fundamentals, yet the sheer size of the surplus that remains underscores the difficulties OPEC producers still face in their quest to rebalance the market," he said in an emailed market report.
For the broader markets, and in a possible indicator of consumer demand, the U.S. Labor Department reported total non-farm payrolls increased 220,000 in June, though the overall unemployment rate was little changed. Average hourly earnings increased 4 cents in June and the number of people without full-time employment was unchanged.
U.S. President Donald Trump has focused on oil and natural gas as part of his broader economic agenda. Compared with total non-farm payroll gains for June, the oil and gas extraction sector added less than 1,000 jobs from May and employment in that sector is relatively unchanged from last year.