By Michael Kitchen, MarketWatch
LOS ANGELES (MarketWatch) — Energy futures traded mostly higher in electronic trade Friday, as a turn lower for the dollar halted the futures’ tumble, though the front-month U.S. crude-oil contract extended its losses modestly.
Crude for July delivery CLN3 -3.36% fell 46 cents, or 0.5%, to 94.94 a barrel. However, the more-active August contract CLQ3 +0.56% moved the other way, adding 10 cents, or 0.1%, to 95.24 a barrel during East Asia trading hours.
In Thursday’s New York Mercantile Exchange session, July crude had plunged 2.9%, while the August futures fell 3.4%, as a wide variety of assets sold off on concern over the possible tapering of U.S. monetary stimulus, and weak Chinese manufacturing data.
But crude got a lift early Friday as the U.S. dollar — which had rallied after the Federal Reserve indicated it could trim its bond-buying this year if the economy improves — swung lower.
The ICE dollar index DXY -0.03% , which measures the greenback against six rivals, fell to 81.700, down from 81.909 around the time of Thursday’s Nymex close, though still above its late Wednesday level of 81.301.
A weaker U.S. unit often supports prices for oil and other dollar-denominated commodities, as it makes them cheaper to holders of other currencies.
August futures for rival oil benchmark Brent North Sea crude UK:LCOQ3 +0.70% also improved early Friday, gaining 30 cents, or 0.3%, to trade at 102.45 a barrel.
More losses to come?
Looking forward, analysts at Citi Futures cited a “lack of tightness in the physical market” as likely to keep oil prices under pressure.
“In our view, it should take a significant fundamental surprise, such as a geopolitical event that disrupts supply, in order for the market to avoid a significant further downside test,” they wrote late Thursday.
The analysts pointed to last year’s second-quarter lows of $77.28 a barrel for Nymex crude and $88.49 a barrel for Brent as offering an “intermediate-term standard of comparison” for the strength of the market.
In other energy-futures trade, natural gas for July delivery NGN13 -0.03% shed a penny, or 0.3%, to 3.86 per million British thermal units.
The July contract had dropped 2% Thursday, with government data showing an increase in U.S. natural-gas inventories last week, though the rise was roughly in line with estimates.
July gasoline RBN3 +0.05% held more or less steady at 2.79 a gallon, while July heating oil gained a cent at $2.88 a gallon. The gasoline and heating-oil contracts had lost 3.5% and 3.4%, respectively, in Thursday’s selloff.
Michael Kitchen is Asia editor for MarketWatch and is based in Los Angeles. You can follow him on Twitter at @KitchenNews.
