Commodity Corner: Oil Down 6.3% for the Week

- Commodity Corner: Oil Down 6.3% for the Week

Friday, June 17, 2011
Rigzone Staff
by Matthew V. Veazey

Crude oil for July delivery lost $1.94 to settle at $93.01 a barrel Friday. Since June 10, oil futures have fallen 6.3 percent.

Pessimism about the U.S. economic outlook and its implications for oil demand contributed to Friday's selloff. A source of this negative investor sentiment was the International Monetary Fund (IMF), which on Friday observed that global economic activity is slowing down "temporarily." In addition, the IMF lowered its 2011 economic growth forecast for the U.S. by three percentage points to 2.5 percent.

Providing a cushion to falling oil futures, however, was a stronger euro. Priced in dollars, crude oil becomes more attractive to investors holding other currencies when the greenback weakens. The euro rose 1.25 percent against the U.S. dollar Friday as the prospects brightened for a resolution to the Greek debt crisis. The leaders of European Union heavyweights France and Germany presented a more unified front Friday in working toward a plan to help Greece restructure its crushing national debt.

French President Nicolas Sarkozy and German Chancellor Angela Merkel lately have had differences of opinion on the role that private banks should play in the bailout, with Merkel arguing that private institutions should be pressured to assume some of the risk. After meeting with Sarkozy Friday, Merkel relented somewhat from her earlier position by advocating a more voluntary role by private banks.

Crude oil traded within a range from $91.84 to $95.40 Friday.

July natural gas continued to be buffeted by weather forecasts showing milder temperatures in the Upper Midwest and Northeast. The front-month contract lost 8.5 cents to end the day at $4.325 per thousand cubic feet.

Natural gas fluctuated from $4.32 to $4.45. For the week, it is down 9.1 percent.

July gasoline ended the day flat, again settling at $2.95—the intraday high. The contract price bottomed out at $2.87, and it is down 2.3 percent for the week.

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