Investing.com – Crude oil prices settled lower as data pointing to signs of rising output weighed on sentiment while a rebound in the dollar added to downside momentum.
On the New York Mercantile Exchange crude futures for March delivery fell 35 cents to settle at $65.45 a barrel, while on London's Intercontinental Exchange, Brent lost 1.65% to trade at $68.50 a barrel.
The number of oil rigs operating in the US rose by six to 765, the highest level since Aug. 11, according to data from energy services firm Baker Hughes. That added to ongoing fears that rising output may weigh on oil prices as US output reached 10 million barrels per day last week, according to data from the Energy Information Administration.
Also adding to pressure on oil prices was dollar strength on nonfarm payrolls data showing wage growth improved, fueling expectation for a faster pace of rate hikes then is currently priced in with some analysts expecting the Federal Reserve’s “dot plots,” to show four rate increases for this year rather than the current three rate hikes.
The weekly slump in oil comes a day after Goldman Sachs revised upward its three-, six- and twelve-month Brent oil price forecasts to $75, $82.50 and $75 a barrel respectively, from $62 previously, amid expectations for a speedy rebalance in oil markets.
The bank said it expects Brent-WTI differential for the second half of 2018 to 2019 to widen to $5.50 a barrel, citing risks of further widening this year. This, in turn, could reaffirm demand for crude oil exports, leading to tighter oil inventories.
The price difference between international benchmark Brent crude and U.S. crude narrowed to from roughly $7 in December to about $4 a barrel in January.