Commodity Corner: China-induced Oil Bounce Wanes
Traders' enthusiasm Monday about the Chinese government's decision to stop pegging the yuan to the greenback did not carry over into Tuesday, and oil futures settled 61 cents lower at $77.21 per barrel.
In fact, the currency float -- initially seen as a means of boosting China's oil demand -- was increasingly viewed as a potential drag on that country's export market as prices of Chinese goods would go up. Also hurting oil demand was a report indicating a decrease in U.S. existing home sales. According to the National Association of Realtors, sales of existing single-family houses, townhomes, condominiums, and co-ops fell 2.2 percent in May from the previous month. The intraday range for crude oil was $76.53 to $78.10.
The July natural gas futures price fell again Tuesday, settling 11 cents lower at $4.76 per thousand cubic feet. In the past few weeks, predictions of above-normal summer temperatures and an active Atlantic hurricane season helped to lift gas prices well above $5.00. Even the possibility of a tropical storm forming in the Caribbean within days failed to reverse the most recent decline, which stems from profit-taking by producers. Natural gas traded from $4.69 to $4.89 Tuesday.
The price of a gallon of gasoline declined by a penny Tuesday, settling at $2.13. Gasoline futures peaked at $2.16 and bottomed out at $2.12 Tuesday.