Contract settles at lowest since mid-February, loses 6% on week
By Claudia Assis and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude futures settled sharply lower Friday, adding to the week’s woes on persistent fears of slowing global growth and diminished demand.
Oil for July delivery CL1N -2.15% shed $1.94, or 2%, to end at $93.01 a barrel on the New York Mercantile Exchange.
That was oil’s lowest settlement since Feb. 18, and one that brought weekly losses to 6.2% — the worst for the product since the week ended May 6.
Prices had edged up the previous session after falling nearly 5% on Wednesday.
The fact that the barrel wasn’t able to significantly bounce on Thursday after the selloff haunted traders on Friday, according to Matt Smith, an energy analyst with Summit Energy in Kentucky.
“There’s a loss of confidence” in oil prices, he said. “There will be some sort of resolution, for better or worse, this weekend for Greece, but everyone just lost buying interest in crude.”
Prices are likely to find support around $90 a barrel. “There’s very limited upside going into next week,” Smith added.
Some good news on the Greek crisis made headlines Friday. France’s Nicolas Sarkozy and Germany’s Angela Merkel, in a joint news conference, vowed to preserve the stability of the euro. Read more about Greece's debt concerns.
Fears of a default for Greece have roiled the markets for the better part of a year, throwing doubts about the global recovery.
Sovereign-debt concerns and macroeconomic unease are driving action in the oil market, overshadowing underlying fundamentals, analysts at Barclays said.
“Those fundamentals are still tightening, with sharp reductions in the prospects for non-OPEC supply and resilient global demand indicating the likelihood of an increased supply gap in the third quarter, in a world with a declining cover of inventories and spare capacity,” the analysts commented.
The dislocation between Nymex-traded West Texas Intermediate crude and ICE-traded Brent crude has pushed the Brent-WTI spread to record levels of above $23 a barrel this week.
The August contract for Brent crude declined 81 cents to $113.21 a barrel on ICE Futures Europe, in London.
The spread is the result of logistical problems at Cushing, Okla., the appeal of Brent over U.S. crudes as a substitute for Libyan oil and speculative demand following OPEC’s failure to raise quotas, analysts at Capital Economics said.
Cushing’s buildup has depressed prices, but problems are likely to diminish over time, Capital Economics added. The difference between the two benchmarks will be below $10 per barrel by the end of the year, the firm forecast.
The dollar index DXY -0.06% , which compares the U.S. unit to a basket of six rival currencies, fell to 75.005 from 75.476 late Thursday, retreating further from early Friday trading.
The dollar lost some of its luster as the euro pressed higher after the Sarkozy-Merkel remarks.
Other energy products settled lower, with July natural gas NG11N -1.77% also slumping 2%. The contract lost 9 cents to finish at $4.33 per million British thermal units.
On the week, natural gas lost 9%.
Gasoline for July delivery RB1N -0.12% was off less than a penny, settling 0.1% lower at $2.95 a gallon. On the week, gasoline lost 2.3%.
July heating oil HO1N -0.61% shed 2 cents, or 0.7%, to $2.98 a gallon. The product lost 4.2% on the week.
