U.S. crude oil ended snapped a two-day gain to end lower on Friday, as the dollar strengthened against a select band of currencies with investors weighing the Federal Reserve stand on holding interest rates at zero for the time being.
For the week, oil futures gained about 3 cents. This is the tenth week of straight gains for most-actively traded contracts.
Meanwhile, Federal Reserve chair Janet Yellen spoke in line with FOMC stand, indicating an interest rate hike would come through some time this year, depending on the health of the U.S. economy.
Nevertheless, Yellen stressed the pace of rate hikes would be gradual and several years before the benchmark Fed Funds Rate returns to normal. The Fed Chief expects the economy to perform better for the reminder of the year, blaming the first quarter debacle on some severe winter and the West Coast labor disputes.
In economic news, U.S. consumer inflation rose strongly with consumer prices in the U.S. rising in line with economist estimates in April, although it also showed a bigger than expected increase in core prices, a report from the Labor Department revealed Friday. A tame inflation report could have cemented expectations the Federal Reserve would keep interest rates at zero all summer.
Light Sweet Crude Oil futures for July delivery, the most actively traded contract, dived $1.00 or 1.7 percent, to settle at $59.72 a barrel on the New York Mercantile Exchange Friday.
Crude prices for July delivery scaled a high of $60.80 a barrel intraday and a low of $59.35.
On Thursday, crude oil for July delivery surged $1.74 or 3 percent, to settle at $60.72 percent, as the dollar weakened against a select band of currencies amid signs the Federal Reserve will hold interest rates at zero for the time being. Prices were also supported by data that showed crude stockpiles in the U.S. to have declined more than expected last week, though production remained firm.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 96.17 on Friday, up from its previous close of 95.40 on Thursday in late North American trade. The dollar scaled a high of 96.27 intraday and a low of 94.82.
The euro trended lower against the dollar at $1.1014 on Friday, as compared to its previous close of $1.1113 in North American trade late Thursday. The euro scaled a high of $1.1207 intraday and a low of $1.1003.
On the economic front, consumer prices in the U.S. rose by 0.1 percent in April after rising by 0.2 percent in each of the two previous months. The modest increase was in line with economists' estimates. Nevertheless, core prices,which excludes food and energy, increased 0.3 percent with economists anticipating a rise of 0.1 percent.
German business confidence weakened marginally from a 10-month high in May and the economy grew at a slower pace in the first quarter, as initially estimated, revealed two separate reports released Friday.
The business confidence index fell less-than-expected to 108.5 in May from 108.6 in April, according to a survey by Munich-based Ifo Institute. This was the first fall in seven months but the index came in above the economists' estimate of 108.3.
Germany's economic growth eased as estimated in the first quarter largely due to the weakness in foreign trade, final data from Destatis showed Friday. Gross domestic product grew 0.3 percent sequentially in the first quarter, slower than the 0.7 percent expansion seen in the fourth quarter.
The total value of new orders received by the German construction industry declined in March, figures from Destatis showed Friday. Orders in the construction sector fell a seasonally and working-day-adjusted 2.2 percent month-over-month in March.
French consumer confidence improved unexpectedly in May to the strongest level since August 2011, survey data from the statistical office Insee showed Friday. The manufacturing confidence index rose slightly to 103 in May from 102 in the previous month, which was revised from a reading of 101. Economists had expected the index to remain stable at 101.
The U.K. budget deficit narrowed in April from last year, data published by the Office for National Statistics showed Friday. Public sector net borrowing excluding banks declined by GBP 2.5 billion to GBP 6.8 billion in April.
British households perceive that the value of their home increased in May, a survey from Knight Frank and Markit Economics showed Friday. The house price sentiment index, or HPSI, fell slightly to 58.0 in May from 58.2 in the previous month. However, a reading above 50 indicates a rise in house prices. This marked the twenty-sixth successive month of the index remaining above 50.
