NEW YORK (MarketWatch) -- Crude-oil futures declined Tuesday after rising more than 12% during a six-session winning streak, as traders locked in some gains and wondered whether the recent rally in energy prices is sustainable.
Crude for July delivery fell 74 cents, or 1.1%, to $67.84 a barrel in electronic trading on Globex.
Earlier, the contract had hit an intraday low of $66.48.
"Everyone is wondering whether the across-the-board rallies are for real or not, and whether prices have already over-discounted the modest signs of recovery we see cropping up," said Edward Meir, an analyst at MF Global.
"For the moment, we think there is still too much buy-side momentum to call a top in any of these markets, be it energy, U.S. equities, or base metals," Meir said in a note to clients.
Charts suggest that of the three, oil is the most overbought, suggesting that it may be the first to buckle under selling pressure, dragging the others down with it, Meir said.
On Monday, oil futures rallied 3.4% to close at $68.58 a barrel on the New York Mercantile Exchange, the highest settlement price for a front-month contract since Nov. 4.
For now, weakness in the U.S. dollar is a "major force" for oil, with "reduced" inventories a close second, said Charles Perry, president of energy-consulting firm Perry Management.
"Recovery of the economy worldwide is still too far ahead to drive the increases we are seeing," he said.
Anthony Sabino, a professor of law at St. John's University whose legal practice includes oil and gas law, said oil prices will likely fall from the current levels once oil stops tracking the gains in the Dow Jones Industrial Average.
"Only a major catastrophe ... could spike it," he said. "Even summer driving season in the U.S. will not significantly drive up the price."
But Perry said crude prices may climb to $70 within a week -- assuming data this week shows another drop in crude inventories.
Supply data ahead
The U.S. Energy Information Administration will report on Wednesday morning the latest data on U.S. petroleum supplies.
Separately, the American Petroleum Institute will release its inventory report late Tuesday afternoon.
Analysts expect weekly oil inventory data to show U.S. commercial crude stocks declined 2 million barrels the week ended May 29, according to a Platts survey of analysts.
"Despite an expected influx of crude imports as previously-held oil in floating storage offloads, a continued increase in refinery utilization rates will likely keep crude inventories on a down trend," said Linda Rafield, Platts senior oil analyst, in a note.
Gasoline stocks are expected to drop 1.5 million barrels, while middle distillate inventories are projected to rise by 950,000 barrels, the Platts survey showed.
Also on Globex Tuesday, July reformulated gasoline was flat at $1.92 a gallon and July heating oil fell 2 cents to $1.76 a gallon.
July natural gas futures dropped 2 cents to $4.222 per million British thermal units.
