(MENAFN- FxPro) Crude oil futures gave back some of the previous session's strong gains on Monday, coming under pressure from a broadly stronger U.S. dollar.
On the New York Mercantile Exchange, crude oil for July delivery slumped 71 cents, or 1.18%, to trade at $59.59 a barrel during European morning hours.
The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was up 0.55% at 97.47 early Monday, not far from the five-week highs of 97.88 hit last week.
Dollar-denominated oil futures contracts tend to fall when the dollar rises, as this makes oil more expensive for buyers in other currencies.
The greenback has been well-supported in recent sessions amid speculation the Federal Reserve was on track to raise interest rates in September.
Recent economic data has indicated that the U.S. economy is gaining momentum after a slowdown in the first quarter, supporting the case for higher interest rates later this year.
Investors looked ahead to the release of key data later in the session for further indications over the timing of a rate increase and the strength of the economy.
The Institute of Supply Management was to release data on manufacturing activity for May later Monday. Market players are also looking ahead to the nonfarm payrolls report due later this week.
On Friday, New York-traded oil futures jumped $2.62, or 4.54%, to end at $60.30 after data showed that the number of rigs drilling for oil in the U.S. fell by the most in four weeks last week, soothing worries that the sharp decline in drilling activity may be nearing an end.
According to industry research group Baker Hughes (NYSE:BHI), the number of rigs drilling for oil in the U.S. fell by 13 last week to 646. The drop marks the 25th straight week of declines and the biggest fall in four weeks.
A week earlier, the rig count fell by just one, marking the slowest rate decline over the last 24 weeks and fuelling concerns that U.S. shale production could rebound in the months ahead.
Market players have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for July delivery declined 74 cents, or 1.13%, to trade at $64.82 a barrel. London-traded Brent prices rallied $2.98, or 4.76%, on Friday to close at $65.56.
A pair of manufacturing reports released on Monday underlined concerns over the health of China's manufacturing sector.
The HSBC final manufacturing index for May came in at 49.2, remaining below the 50-point level that separates growth in activity from contraction for the third straight month.
Meanwhile, the official China's manufacturing purchasing managers' index inched up to 50.2 last month from 50.1 in April, broadly in line with market expectations.
China is the world's second largest oil consumer and manufacturing numbers are used as indicators for fuel demand growth.
Energy traders are awaiting a critical OPEC meeting in Vienna on June 5. The oil cartel is largely expected to keep production levels steady above 30 million barrels per day, despite ongoing concerns over ample global supplies.
The spread between the Brent and the WTI crude contracts stood at $5.23 a barrel early on Thursday, compared to $5.26 by close of trade on Friday.
In the currency market, the euro slipped lower against the dollar on Monday as ongoing concerns over the prospect of a Greek debt default weighed.
Concerns over a possible default have mounted since Athens warned last month that it will be unable to make the repayment if a cash-for-reforms deal with its international lenders was not reached by then.
Greece is due to make a ‚¬305 million payment to the International Monetary Fund on June 5.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.