Crude Drops on Profit-Taking, Euro-Zone Concerns
Crude prices retreated Friday from a multiday rally on profit-taking, a stronger dollar and revived concerns about the euro zone.
Front-month Nymex crude futures for August settled at $91.44, down $1.22, or 1.3%. The August WTI contract expired Friday. September WTI crude futures settled at $91.83, down $1.14 for the day. Front-month Brent oil futures were trading at $106.74, down $1.06.
The retreat follows seven straight sessions of higher crude prices, a rally built on geopolitical concerns about Iran and increased speculation of another round of central-bank quantitative easing.
Several analysts attributed Friday's decline to profit-taking after WTI futures jumped 10.43% over the seven-day stretch.
"Today was really more about some profit-taking," said Andrew Lebow, senior vice president of energy derivatives for Jefferies Bache LLC.
"This morning's selloff appears heavily related to profit-taking, and a resumption of this month's strong advance would appear likely early next week on any fresh headlines out of the Middle East," Jim Ritterbusch, president of the oil-trading advisory firm Ritterbusch & Associates, said in a note.
Also weighing on prices Friday was a stronger U.S. dollar, which discourages crude purchases by making the commodity more expensive to consumers who use other currencies. The dollar was up about 1% compared with the euro, and the U.S. dollar index was up about 0.7% Friday.
"The dollar is stronger today, and that's pushing down crude," said Jason Schenker, president of Prestige Economics, a commodity market and research consulting firm.
Matt Smith, an analyst at Summit Energy, said the market's mentality has returned to one of "risk aversion" following reports that Spanish bond yields soared anew.
"We're seeing the euro get hammered, and it's just a flight from risk," Mr. Smith said.
Front-month reformulated gasoline blendstock, or RBOB, settled at $2.943 a gallon, up 0.41 cent. Front-month heating oil settled down 2.27 cents to $2.924 a gallon.
Copyright (c) 2013 Dow Jones & Company, Inc.
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