After three weeks of continuous advance, crude oil saw considerable red ink this week with the active August month future falling by $ 6.72 or 8.5% to $ 72.14/ barrel compared to a close of $78.86 last week.
Prices closed in red on 4 out of 5 days reacting to all the negative news from US and Europe. Lesser than expected personal income set the tone for the week. Later in the week, declining consumer confidence, ISG manufacturing index and construction spending further added to the bearishness. Moody's action of keeping Spain's rating on view kept the European concerns alive.
On supply side, a Reuter's report cited that Russia's oil production hit a record high in June and remained above 10 million barrels a day for the 10th month in a row. This as per the report, means that Russia remains the world's top oil producer, ahead of Saudi Arabia.
Friday's report about employment situation in US along with decreasing factory orders induced the prices to hold at the low level.
Only good news for the curde oil price was that US oil inventories declined by 2 million barrels but it had little impact on prices.
With no major data release from US next week, we expect crude to trade in a range for the next week. Prices will react to news of possible storm in Gulf region or Euro Area concerns.
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