CA: OIL FUTURES: Crude Drops On Mixed Economic Outlook
NEW YORK (Dow Jones)--Crude oil futures were trading slightly lower Thursday, as strong earnings reports from major banks and troubles at a major lender muddied the outlook for the economy.
Light, sweet crude for August delivery traded 32 cents, or 0.5%, lower at $61.22 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 34 cents lower at $62.75 a barrel.
Oil prices have come under pressure over the last two weeks, as swelling refined product inventories indicate that demand has yet to recover. The market has taken cues from equities to pinpoint the start of an economic recovery that might draw down the fuel surplus.
U.S. equities were up slightly after the opening bell, and the direction they take Thursday will likely determine where oil prices head, said Gene McGillian, an analyst with Tradition Energy.
"The market is trading in conjunction with financials and firmer stocks could keep us above $60 a barrel," McGillian said.
JPMorgan Chase & Co. (JPM) reported strong second-quarter results, affirming improving fortunes in the financial sector that Goldman Sachs Group Inc. (GS) outlined in its earnings report Tuesday. Investors have looked to the major banks, whose troubles helped deepen the global economic downturn last fall, for signs of a recovery. Both oil and equities surged Wednesday after positive outlooks from Goldman Sachs and technology sector leader Intel Corp. (INTC)
But markets were prevented from extending the previous day's rally by ailing business lender CIT Group Inc. (CIT), which looks to be the first major financial institution to be denied a government rescue since Lehman Brothers in September. That firm's collapse helped usher in a period of turmoil from which the global economy is only just beginning to emerge.
Front-month August reformulated gasoline blendstock, or RBOB, recently traded 96 points, or 0.6%, lower at $1.6985 a gallon. August heating oil recently traded 65 points, or 0.4%, higher at $1.5886 a gallon.
-By Madalina Iacob, Dow Jones Newswires; 212-416-2677; madalina.iacob@dowjones.com.
