By Saumya Vaishampayan and Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) — Crude-oil futures edged lower on Friday, continuing to drop after the previous session’s steep selloff.
Crude for August delivery CLQ3 -1.88% fell 22 cents, or 0.2%, to $94.92 a barrel on the New York Mercantile Exchange.
The market is “digesting yesterday’s huge losses and thus far, we’re not getting much guidance from equities,” said Jim Ritterbusch, president of Ritterbusch & Associates. “Today is kind of a day of rest.”
U.S. stocks opened up in the wake of a two-day selloff.
In Thursday’s New York Mercantile Exchange session, July crude plunged 2.9% — the largest one-day drop in seven months — while August crude fell 3.4% and a wide variety of assets sold off on concern over the possible tapering of U.S. monetary stimulus and weak Chinese manufacturing data. The July contract expired Thursday.
The ICE dollar index DXY +0.85% , which measures the greenback against six rivals, rose to 82.229 in recent trade.
The U.S. dollar rallied after the Federal Reserve indicated it could trim its bond-buying this year if the economy improves. A stronger U.S. unit often weighs on prices for oil and other dollar-denominated commodities, as it makes them more expensive to holders of other currencies.
In Russia, oil company OAO Rosneft agreed to deliver 365 million tons of oil to China. The deal is worth $270 billion and supplements the 15 million tons of oil already provided by Russia to China.
August futures for rival oil benchmark Brent crude UK:LCOQ3 -1.83% shed 13 cents, or 0.1%, to trade at $102.01 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 trade, natural gas for July delivery NGN13 -1.42% fell 2 cents, or 0.7%, to $3.85 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% was flat at $2.78 a gallon, while July heating oil was also unchanged at $2.86 a gallon. The gasoline and heating-oil contracts lost 3.5% and 3.4%, respectively, on Thursday.
