By Myra P. Saefong and Nick Godt, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures traded modestly higher Friday, just above their week-ago levels, as the market weighed expectations that global central banks stand ready to provide monetary stimulus following Greece’s elections against pressure arising from U.S. economic data that raised demand concerns.
Crude for July delivery CLN2 +0.06% gained 30 cents, 0.4%, to $84.21 a barrel on the New York Mercantile Exchange, recovering after touching a low of $83.65. A week ago, it settled at $84.10.
The move followed reports that the Federal Reserve and other central banks from the Group of 20 nations are getting ready to provide stimulus, amid mounting concern that Greece might leave the euro zone following the result of elections on Sunday. Central banks stand ready to act
“The three most important events for the near-term price of oil are the Greek elections on Sunday, the U.S. Federal Reserve meeting [that begins] on Tuesday and the July 1st implementation of the oil embargo on Iran,” said Kirk McDonald, senior research analyst at St. Louis-based Argent Capital Management.
For now, oil is “bouncing a little today on speculation that global central banks are preparing to act in a coordinated fashion, if necessary, following the Greek elections,” he said.
A weakening dollar also provided a lift for commodities, with the dollar index DXY -0.28% , which measures the U.S. unit against a basket of six major currencies, lately at 81.724, off from 81.917 on Thursday. Read more on currencies.
But U.S. economic data that came in weak across the board put some pressure on oil.
The University of Michigan-Thomson Reuters consumer-sentiment index fell to a preliminary June reading of 74.1 — the lowest since December. Read more on the index.
The Empire State index fell to 2.3 in June from 17.1 in May, according to the manufacturing survey released by the Federal Reserve Bank of New York. It’s the lowest reading since last November. Read more on NY factory activity.
Also Friday, the Fed reported that U.S. industrial production slipped a seasonally-adjusted 0.1% in May. The market was expecting no change. Read more on industrial output.
OPEC aftermath
At a meeting in Vienna Thursday, members of the Organization of the Petroleum Exporting Countries agreed to leave their daily production ceiling at 30 million barrels.
McDonald called the cartel’s announcement “a non-event as they had telegraphed the decision to hold production steady very consistently over the previous week or so.” Read more on OPEC affirming production ceiling.
“Holding the production steady in the face of a slowing economy is a good decision in my opinion because it reassures the world that they do not need to fear the burden of higher energy costs while they are facing an economic slowdown in Europe, China and the U.S.,” he said.
Tension within the cartel remained, however.
Before the official meeting, Iranian Oil Minister Rostam Ghazemi “dropped a verbal bomb aimed at the Saudis,” said Bob van der Valk, a petroleum-industry analyst based in Terry, Mont. He warned Saudi Arabia “not to use oil as a weapon against it by pumping more oil to countries no longer buying Iranian crude” as a result of economic sanctions imposed by the European Union.
Also Friday in Nymex trading, July gasoline RBN2 +0.89% rose 2 cents, or 0.8%, to $2.70 a gallon, trading a bit higher than a week ago, and July heating oil HON2 +0.79% stood at $2.65 a gallon, up nearly 3 cents, or 1%, to $2.65 a gallon, although this was down from last Friday’s close. Read Commodities Corner on the prospects for ethanol.
Natural gas for July delivery NGN12 -0.84% shed 2 cents, or 0.6%, to $2.48 per million British thermal units, consolidating after having rallied 14% on Thursday. It’s trading almost 8% higher for the week.
Traders on Thursday were likely “grasping at a reason to rally after storage came in a little below expectations,” said Beth Sewell, managing partner at Quantum Power & Gas Services. “There’s really nothing to cause a change in supply/demand that happened magically overnight.”
Myra Saefong is a MarketWatch reporter based in San Francisco.
Nick Godt is a MarketWatch reporter based in Mumbai.
