Crude oil prices drop further on US dollar strength

Crude oil futures declined on 6 March and settled lower for the week after stronger-than-expected US jobs data drove the US dollar higher.

Brent April contract finished 75 cents, or 1.2%, lower at $59.73 a barrel on Friday.

The European benchmark lost 4.6% for the week as a whole, its sharpest decline since the week ended 9 January.

US April contract finished $1.15, or 2.3%, lower at $49.61 a barrel.

WTI crude lost 0.3% for the week.

An upbeat US jobs report weighed on oil and other commodities that are traded in dollars. A strong greenback makes dollar-denominated commodities more expensive for holders of other currencies.

Friday's (6 March) jobs report showed that the world's leading economy created 295,000 jobs in February and that its unemployment rate fell to 5.5%, beating expectations of 238,000 new jobs and a 5.6% unemployment rate.

US drilling activity

The marketplace has been tracking weekly data on US oil and gas drilling activity for a while now.

Baker Hughes reported that the number of rigs fell by 75 to 1,192 rigs as of 6 March. The rig count is now down 600 from the corresponding period in the preceding year.

Matt Smith, commodity analyst at Schneider Electric, wrote in a note to clients: "This hawkish [US nonfarm payrolls] report is stoking the expectation for interest-rate hikes later in the year in the US, hence the dollar is rallying like a mad thing.

"This is providing gale-force headwinds for a crude move higher."

Earlier, Capital Economics said in a note: "Most commodity prices fell this week even before the strong US payrolls data raised expectations of early Fed tightening and further dollar strength.

"While recognising that both developments have negative implications for commodity prices, the robust US economic growth that justifies raising rates from what are, after all, emergency lows should also be positive for commodity demand.

"What's more, we expect the Fed to move cautiously and US interest rates to remain relatively low by past standards. Meanwhile, the Bank of England and the ECB confirmed this week that monetary policy would stay ultra-loose in Europe."