Natural gas bucks trend to gain 2.4% on cooler weather
By Claudia Assis and Sarah Turner, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures traded lower Monday as investors worried about the rising cost of Spanish bonds, keeping markets under a cloud and cutting through hopes of more demand for oil.
Prices earlier had gotten a small boost from election results in Greece, where the pro-austerity New Democracy party won a modest victory.
Oil for July delivery CLN2 -1.52% declined $1.04, or 1.2%, to $83.01 a barrel on the New York Mercantile Exchange. Prices had traded as high as $85.60 a barrel earlier, according to FactSet Research.
The yield on Spain’s 10-year bond shot to an euro-era high past 7% on Monday, eclipsing the positive results from the Greek election. Yields on Italian 10-year bonds were past 6%.
Spain sought a bank bailout last week, spurring a brief rally in markets. Doubts about the plan’s scope and effect soon emerged, however, plaguing Spanish markets and keeping investors worried about the country, the euro zone’s fourth largest economy.
Oil rose a tad on Friday, ending the week almost flat, following a report that suggested that governments stood ready to act if needed following Sunday’s elections in Greece.
The vote produced a close victory for the New Democracy party. That helped to soothe market fears Monday that the country would exit the common-currency bloc. See full story on the Greek vote.
“There is still likely to be plenty of horse trading before a new government is formed, and even then Greece’s fiscal/debt/growth problems will not just miraculously go away,” they added.
Also in focus for oil markets, Saudi Arabia’s Crown Prince Nayef bin Abdul-Aziz al-Saud died in Geneva over the weekend, according to reports. Saudi Arabia is one of the world’s largest producers of oil.
And in Egypt, there were reports that the Muslim Brotherhood’s presidential candidate had won the Middle Eastern nation’s presidential election.
July gasoline RBN2 -1.55% traded 3 cents lower, or 1%, to $2.67 a gallon, with July heating oil HON2 -1.21% down 2 cents, or 0.6%, to $2.63 a gallon.
Natural gas bucked the downward trend, with the product for July delivery NGN12 +4.05% up 6 cents, or 2.4%, to $2.53 per million British thermal units.
“Weather outlooks are sponsoring (Monday’s) rally, as warmer-than-normal conditions dominate the U.S. through the end of June, set to boost cooling demand,” said Matt Smith, an energy analyst with Summit Energy, in a note to clients.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Sarah Turner is MarketWatch's bureau chief in Sydney.
