MW: Crude oil turns lower as fears over U.S. credit, GM weigh
Crude-oil futures lost gains Friday, turning lower as worries over the U.S. credit rating and General Motors Corp.'s possible bankruptcy next week dampened economic recovery hopes.
Losses were limited by a weakening dollar, which tends to push up dollar-denominated oil prices. The greenback fell Friday to the lowest level this year against the euro as worries increased that the U.S. could lose its triple-A credit rating.
Crude for July delivery was last down 35 cents, or 0.6%, to $60.70 a barrel in North American electronic trading. It rose as much as 1.5% earlier to $61.98 a barrel. Despite the loss, crude is set to end the week up 6.7%.
Standard & Poor's Ratings Service Thursday warned Britain that it may lose its triple-A rating, triggering a drop in U.K. bonds and sparking global fears about sovereign credit ratings. In the U.S., the 10-year Treasury bond fell below a crucial level.
"Fears about our debt and fears over our credit rating are creating a crack in the confidence that we can print our way to economic prosperity," said Phil Flynn, vice president at futures trading firm Alaron Trading.
The Obama administration is preparing to send GM into bankruptcy as early as the end of next week under a plan that would give the automaker tens of billions of dollars more in public financing, the Washington Post reported Friday.
Oil's weekly gain came after government data on Wednesday showed U.S. crude inventories fell for a second week, down 2.1 million barrels to 368.5 million.
The Organization of Petroleum Exporting Countries is scheduled to meet Thursday in Vienna to discuss production and oil prices. The cartel, which controls about one-third of the world's oil output, raised its production in April for the first month in eight.
Analysts were not expecting another cut in production quota from the cartel. Rather, they said OPEC will ask its member to increase compliance.
In other energy trading Friday, June-reformulated gasoline rose 0.3% to $1.8053 a barrel, and June heating oil fell 1.1% to $1.5134 a gallon.
Natural gas for June delivery fell 2.5% to $3.514 per million British thermal units.
In oil exchange-traded funds, the United States Oil Fund (USO 33.32, -0.06, -0.18%) fell 0.3% to $33.29.
In energy equities, the Amex Oil Index (XOI 939.33, +8.03, +0.86%) rose 0.3% to 933.95. The Amex Natural Gas Index (XNG 418.74, +3.57, +0.86%) edged 0.1% higher to 415.72. The Philadelphia Oil Service Index (OSX .X 162.28, +3.66, +2.31%) rose 0.5% to 160.79.
