US oil settles down 1.5%, at $46.05 a barrel

US oil settles down 1.5%, at $46.05 a barrel

Crude futures pared losses after Baker Hughes reported U.S. energy firms cut 13 oil rigs for the first time in seven weeks, as a renewed slump in prices this summer forced drillers to make a second round of cut-backs.

The decline brings the total to the week ending Sept. 4 down to 662, the lowest since mid-July. The number of rigs in U.S. oilfields stood at 1,584 at this time last year.

The decline comes the same week new government data showed the U.S. oil industry pumped less crude than initially estimated this year, evidence that drillers were scaling back production amid collapsing prices.

U.S. crude closed down 1.5 percent, at $46.05 a barrel. Brent crude for October was down $2.30 a barrel at $50.40.

Oil prices had fallen alongside stocks on Wall Street on Friday as the oil market awaited a weekly reading on the U.S. oil rig count, after jobs data from the world’s No. 1 economy failed to provide much direction.

The August U.S. jobs report showed fewer new jobs created last month than forecast in a Reuters poll. But it also showed the unemployment rate was at its lowest in more than seven years.

The jobs report raised prospects for the Federal Reserve to raise interest rates sooner rather than later, analysts said. While that would be positive for the dollar, any rise in the currency also tends to weigh on commodities, including oil.

Oil prices were also pressured by a cut in European growth forecasts heightened worries over the outlook for demand at a time of huge oversupply.

The European Central Bank (ECB) said on Thursday that economic troubles in China and emerging markets could drag the 19-member euro zone into deflation in the coming months. The ECB now sees the euro zone economy growing by 1.4 percent this year, below its previous 1.5 percent projection.

In a sign that banks increasingly expect oil prices to stay low for longer, BNP Paribas, Barclays and Commerzbank cut their short-term price forecasts.

“Oversupply will remain in the market for longer than expected,” Carsten Fritsch, Commerzbank senior oil and commodities analyst, told Reuters Global Oil Forum after announcing the reduction.

His team cut its year-end Brent forecast by $10 to $55 a barrel and expects prices to reach $65 by the end of 2016.

Barclays cut its 2015 Brent price forecast by $5 to $55 a barrel on Friday, and by $5 to $63 a barrel for 2016.

BNP Paribas lowered its Brent price forecasts on Thursday to $56 per barrel from $62 for 2015 and to $62 from $76 for 2016.

Building on bearish comments, Russia’s energy minister said on Friday he expected oil market oversupply to continue this year try this. He said he considered $50-70 a barrel to be a fair price.

“There is still a supply-demand imbalance and on top of that is the overhang in the market,” said Abhishek Deshpande, oil analyst at Natixis in London.

“The pressure will remain on oil prices.”

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