Commodity Corner: Oil Falls on Saudi Production Report
The prospect of more Saudi crude on the world market and a stronger dollar contributed to a 2.6 percent dip in oil futures Friday.
Crude oil for July delivery settled at $99.29 a barrel after Saudi Arabian newspaper reported that the kingdom plans to boost oil production. The reported unilateral move by the world's largest oil exporter follows OPEC's inability earlier this week to decide on raising member countries' production quotas.
Also applying downward pressure to the oil futures price was a strengthening U.S. dollar. The Dollar Index, which gauges the value of the greenback against other major currencies, gained 0.9 percent Friday. Because oil is priced in dollars, the commodity becomes a less attractive buy for investors holding other currencies when its value increases.
Oil traded within a range from $98.79 to $102.15 Friday. Compared to the June 3 settlement price, oil is down 0.9 percent for the week.
July natural gas gained nine cents Friday to settle at $4.76 per thousand cubic feet. Thanks to weather forecast models predicting another heat wave later this month from the Midwest to the East Coast, demand for natural gas to generate electricity to power air conditioners is expected to soar.
Front-month natural gas fluctuated from $4.66 to $4.77, and the July contract price is up 1.1 percent for the week.
July gasoline lost two cents to end the day at $3.02 a gallon. The gasoline futures price peaked at $3.05 and bottomed out at $2.98 during Friday's trading. For the week, gasoline is up one percent.