Crude oil futures - weekly outlook: February 3 - 7

Investing.com - New York-traded crude oil futures fell from a four-week high on Friday, as growing concerns over the economic outlook in emerging markets and the impact on future oil demand prospects dampened the appeal of the commodity.

On the New York Mercantile Exchange, light sweet crude futures for delivery in March shed 0.75% on Friday to settle the week at USD97.49 a barrel by close of trade.

On Thursday, Nymex oil prices hit USD98.59 a barrel, the strongest level since January 2, before trimming gains to end at USD98.23 a barrel, up 0.89%.

U.S. oil futures were likely to find support at USD96.32 a barrel, the low from January 29 and resistance at USD98.59 a barrel, the high from January 30.

On the week, U.S. crude futures, also known as West Texas Intermediate or WTI, climbed 0.87%, the third consecutive weekly gain.

Emerging markets have been hard hit by a combination of concerns over the impact of cuts to the Federal Reserve’s stimulus program and fears over a possible slowdown in China.

Oil prices were also weighed by a broadly stronger U.S. dollar, as dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, rose 0.24% on Friday to settle the week at 81.37, the highest since January 21.

Nymex oil prices rallied on Thursday amid indications the U.S. economic recovery is deepening. The Commerce Department said U.S. gross domestic product 3.2% in the fourth quarter, in line with expectations.

On Wednesday, the Fed said it would scale back its monthly asset purchase program by another USD10 billion to USD65 billion a month, citing improvements in the labor market.

The central bank said it will keep a close eye on economic indicators before deciding to wind down its stimulus program even further.

In the week ahead, investors will be keenly anticipating Friday’s U.S. nonfarm payrolls report for January after December’s report showed that the economy added far fewer jobs than expected.

Data from the Commodities Futures Trading Commission released Friday showed that hedge funds and money managers increased their bullish bets in oil futures in the week ending January 28.

Gross long oil positions rose by 11,966 contracts to 306,886, while gross short positions fell by 17,814 lots to 46,604. Net longs totaled 260,282 contracts, compared to 230,503 in the preceding week.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for March delivery tumbled 1.44% on Friday to settle the week at USD106.40 a barrel, the lowest since January 24.

The March Brent contract declined 1.37% on the week. Meanwhile, the spread between the Brent and the crude contracts stood at USD8.91 a barrel by close of trade on Friday.

The spread between the two contracts narrowed to a three-month low as the Keystone XL pipeline linking Cushing, Oklahoma, to the U.S. Gulf Coast began making deliveries earlier in January.

Flows will rise over the course of the year toward its 700,000-barrel capacity, which should help alleviate a glut of crude in the Midwest.