Crude oil futures - Weekly outlook: September 24 - 28

Forexpros - Crude oil prices settled higher on Friday, moving further away from a six-week low hit in the previous session, as market sentiment firmed up on talk Spain was moving closer to seeking a full-scale sovereign-debt bailout. Despite Friday’s gains, oil prices ended the week with heavy losses amid concerns over slowing global growth and signs that top oil exporter Saudi Arabia was pumping more oil. On the New York Mercantile Exchange, light sweet crude futures for delivery in November rose 0.7% Friday to settle at USD93.06 a barrel by close of trade. Despite the day’s gains, New York-traded crude oil futures plunged 6% on the week, amid growing concerns over the global economic outlook and the impact on future oil demand prospects. New York-traded oil prices fell to a six-week low of USD90.06 a barrel on September 20, following the release of mostly disappointing manufacturing activity reports from China and the euro zone. China’s HSBC flash purchasing managers' index ticked up to 47.8 in September from 47.6 in August, remaining below the 50.0-mark for the 11th consecutive month, showing the sector was still contracting. China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand. Meanwhile, data showed that euro zone manufacturing activity remained in contraction territory for the 13th consecutive month in September, while service sector activity slumped to the lowest level since July 2009. Prices were also weighed by a surprise increase in U.S. oil stockpiles. Weekly data from the U.S. Energy Department showed that crude oil supplies rose by 8.5 million barrels last week, surging past expectations for a 1.0 million barrel increase. The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand. But appetite for growth-linked assets improved on Friday after the Financial Times reported that Spain was moving closer to requesting a sovereign bailout and is currently working out the terms with European Union policymakers. A bailout would allow the European Central Bank to step in and buy Spanish sovereign debt, which would result in reduced borrowing costs for the debt-strapped nation. The news sparked demand for the euro and other higher-yielding assets, which sent gold's traditional hedge, the U.S. dollar, falling on Friday. The dollar index, which tracks the performance of the U.S. dollar against a basket of six other major currencies, declined 0.1% on Friday to settle the week at 79.44. Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies. Some bargain buying also helped lift oil futures off the lows, after prices moved into oversold territory. Technical traders said prices had fallen too far, too fast and were due for a technical bounce. Oil prices have been under heavy selling pressure in recent sessions amid signs that top oil exporter Saudi Arabia was pumping more oil. The country’s output is near the highest level in more than three decades, according to a Persian Gulf official with knowledge. Analysts said that the oil market is now balancing Saudi assurances that it would make up for any supply shortfalls against the potential risk for the loss of oil from Iran amid tighter Western sanctions on Tehran over its disputed nuclear program. In the week ahead, investors will continue to eye developments in Spain, while U.S. data on consumer sentiment and spending will be closely watched as investors attempt to gauge the strength of the U.S. economy. Market participants will also continue to monitor rising geopolitical tensions in the Middle East and Africa, amid growing fears over a disruption to supplies from the region. The violence in the MENA-region, which holds more than half of the world’s oil reserves, was prompted by extracts of a film that portrays Muhammad. Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for November delivery settled at USD111.56 a barrel by close of trade on Friday. Prices touched a six-week low of USD107.13 a barrel on September 20. The London-traded Brent contract lost 4.4% over the week, with the spread between the Brent and the crude contracts standing at USD18.50 a barrel by close of trade Friday