By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — Crude-oil futures slipped further in electronic trading Tuesday after suffering a big reversal in the previous session, as fears related to the aftermath of the upcoming Greek elections took a toll on investor risk appetite.
July futures for light, sweet crude-oil CLN2 -0.82% dropped 61 cents, or 0.7%, to $82.09 a barrel on Globex, although they recovered some ground after falling as low as $81.14 earlier in the session.
The front-month contract, which had jumped as high as $86.64 a barrel during Asian trading hours on Monday, made a sharp U-turn in the European and U.S. sessions before finishing $1.40 on the New York Mercantile Exchange.
The retreat came as optimism over Spain’s agreement to seek a European Union bailout of its banks gave way to uncertainty about the euro zone’s financial troubles ahead of this weekend’s elections in Greece, which could potentially lead to the country’s exit from the common currency bloc.
“The ‘half life’ of the market reaction to EU bailout announcements has been getting shorter, with the support linked to the weekend move to allocate 100 billion euros ($125 billion) to Spain lasting only a matter of hours,” said Tim Evans, an energy analyst at Citi Futures Perspective. “We continue to view the upcoming calendar as somewhat intimidating, when it comes to building a new risk position.”
“Supply surprises aside, we envisage only a gradual rebalancing of the physical oil market. Demand should firm seasonally in [the third quarter], contributing to that story, although we don’t imagine robust year-on-year growth,” Evans added.
The decline in oil prices came despite an increase in U.S. equity futures and flat movements in the dollar.
The ICE dollar index DXY -0.27% , which measures the greenback’s performance against a basket of six major currencies, was at 82.530, compared with 82.529 in North American trade Monday. Dow Jones Industrial Average DJIA -1.14% futures, meanwhile, rose 48 points, or 0.4%, to 12,358.
Among other products in the energy complex, July futures for heating-oil HO 0.00% and gasoline RBN2 -0.41% fell by 0.1% to $2.63 per gallon and by 0.2% to $2.65 per gallon, respectively.
Natural-gas futures due for delivery next month NGN12 -1.26% dropped 1.1% to $2.19 per million British thermal units.
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.
