WSJ:OIL FUTURES: Crude Oil Down as Euro Weakens to Dollar
-- Euro weakens to dollar, making oil pricier for holders of currencies other than dollar
-- Market participants await non-farm payroll data
-- Worries about the health of the global economy send crude oil lower, analysts say
-- Market shrugs off U.S. EIA report of a draw in crude-oil inventories
By Jenny Gross
LONDON--Crude oil futures fell 1% Friday, erasing Thursday's gains as a persistently weak euro to the dollar hampered prices from sustaining a rally.
At 1037 GMT, the August Brent contract on London's ICE futures exchange was down $1.27, or 1.3%, at $99.43 per barrel. The August contract on the New York Mercantile Exchange was trading down $1.38, or 1.6%, at $85.82 per barrel.
The weakening euro to the dollar is "starting to be problematic for the recovery of oil prices," Olivier Jakob, managing director at Petromatrix, said in a note published Friday. A week after a European summit was supposed to have "saved Europe," the euro was at its lowest level against the dollar since early June and Spain's benchmark 10-year bond yield rose close to 7%.
The euro was at $1.2384 as of 1038 GMT from $1.2393 late Thursday in New York.
Simon Wardell, research manager at IHS Global Insight, said Friday's lower prices were a reaction to Thursday's cutting of interest rates by China's central bank and the European Central Bank.
"Yes, the central banks took a concerted effort, but the worries about China acting quite aggressively suggests there may be a more worrying economic situation than was previously thought," Mr. Wardell said.
Investors are looking to June U.S. non-farm payroll data due later Friday. The U.S. Energy Information Administration Thursday reported a bigger-than-expected 4.3 million-barrel drop in U.S. crude-oil inventories in the week ended June 29, though markets largely shrugged off this news.
At 1038 GMT, the ICE's gasoil contract for July delivery was trading $12.75 lower at $876.25 per metric ton, while Nymex gasoline for August delivery was down 245 points at $2.7403 per gallon.
