MW:Oil futures cool after heady rally as dollar rises
By Michael Kitchen, MarketWatch
LOS ANGELES (MarketWatch) — Benchmark U.S. crude-oil futures gave back some gains from their seven-day climb during Asian trading hours Friday, as a rising dollar helped weigh on the oil market.
Crude for August delivery CLQ2 -0.56% traded 0.7% lower at $92.06 a barrel, down 60 cents from its $92.66 settlement on the New York Mercantile Exchange.
The loss came as the U.S. dollar edged higher, with the dollar index DXY rising to 82.972 from 82.926 late Thursday in North America. Gains for the dollar tend to depress the price of dollar-denominated commodities, such as oil.
Nymex crude had rallied $2.79, or 3.1%, in Thursday trade, boosted by geopolitical concerns after Israel’s Prime Minister Benjamin Netanyahu said Iran was responsible for a recent deadly terror attack aimed at Israeli tourists in Bulgaria and said Israel would respond with force. The jump marked crude futures’ seventh straight higher settlement. Read more on Thursday’s crude-oil trade.
But those concerns appeared to ease, with Citi Futures analysts saying uncertainty over oil’s future direction has grown.
“We’d suggest taking at least partial profits on any long positions and turn cautious on any new positions, as the next $5 swing could be in either direction,” they said.
The oil-futures market appears to have already priced in stronger seasonal demand, less output from the Organization of the Petroleum Exporting Countries and more from non-OPEC countries, as well as a roughly 1% weakening in global demand, Citi Futures said.
However, a QE3 from the U.S. Federal Reserve and military action against Iran weren’t reflected in the current price, they said.
Elsewhere in the energy complex, gasoline for August delivery RBQ2 -0.63% fell 0.6% to $2.92 a gallon, and August heating oil HOQ2 -0.38% lost 0.3% to $2.94 a gallon.
August natural-gas futures NGQ12 +0.47% , however, rose 0.6% to $3.02 per million British thermal units, extending gains after U.S. Energy Information Administration data showed weekly natural-gas inventories at the low end of an expected range.
Michael Kitchen is Asia editor for MarketWatch and is based in Los Angeles.
