Oil futures edged lower Friday, as traders paused amid uncertainty over the details of the European Union's rescue package for Greece.
Light, sweet crude for December delivery settled 64 cents, or 0.7%, lower at $93.32 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled down $2.17, or 1.9%, to $109.91 a barrel.
Futures ended slightly lower as market participants reflected on the rescue package unveiled by European Union officials on Thursday. The package, aimed at staving off a disorderly default of Greece, sent crude futures soaring on Thursday. But questions persisted over how the EU will implement the plans and if they will be enough to solve the debt woes.
"The lack of details out of this European summit really questions the feasibility of this euro-zone debt deal," said Peter Donovan, vice president at Vantage Trading, an oil options brokerage in New York.
Oil market participants were closely eyeing the negotiations over European sovereign debt because of fears that the debt crisis could spread to other countries in Europe or elsewhere. That could trigger a prolonged economic slump that would weigh heavily on crude-oil demand.
Positive developments in Europe over the last month played a large role in the recent crude-market rally. Even after Friday's decline, Nymex crude futures are up almost 18% in October, a volatile month during which the contract also touched a one-year low of $74.95 a barrel. On Thursday, the contract entered positive territory for the year.
"Two weeks ago, everyone was worried the entire world was going to come apart, and now there's some reprieve," said Kyle Cooper, managing partner at IAF Energy Advisors in Houston.
As for Europe's debt plan, he said: "I don't think this solves the problem--it kicks it down the road a little while."
Falling U.S. oil inventories have also helped fuel the recent rally in Nymex crude, especially in the front-month contract. This week, front-month crude on the Nymex jumped in price above subsequent months, a phenomenon in the futures market that typically signals worries about a near-term supply crunch.
The market for Brent crude has exhibited the phenomenon, called backwardation, for much of this year, underscoring even tighter supplies in Europe. Brent crude has traded at a steep premium over the Nymex contract in recent months, in large part due to tight European supplies.
Earlier in October, the gap between the two contracts hit a record $27.88 a barrel. But the run-down in U.S. inventories, as well as expectations for the return of Libyan crude exports, narrowed the differential to $16.59 on Friday.
Front-month November reformulated gasoline blendstock, or RBOB, settled down 5.98 cents, or 2.2%, to $2.6822 a gallon. November heating oil settled down 3.92 cents, or 1.3%, to $3.0592 a gallon.
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