US Crude Oil Futures Drop 1.5% on Disappointing Data
U.S. oil futures prices tumbled 1.5% Friday as concerns about a stalling European economy sparked some profit-taking ahead of the long weekend, traders and analysts said.
News from overseas gave the market little reason to hope for an improving economy and more oil demand. Retail sales in the U.K. fell 0.6% in January, the biggest monthly decline in nine months and well short of expectations for a 0.6% increase. A decline in euro-zone imports and exports in December added to the pessimism, analysts said.
The weak European data inspired selling among traders who had ridden the oil market rally that brought prices to a two-week high of $97.31 Thursday, said Gene McGillian, broker and analyst at Tradition Energy.
"The market had a significant rally the rest of this week and...seemed ready" for a selloff, said Andy Lebow, analyst at Jefferies
"WTI finally came under some liquidation pressures," Mr. McGillian added.
The situation wasn't helped by lower-than-expected U.S. industrial production data for January. Output dropped 0.1%, versus expectations of a 0.2% gain.
Light, sweet crude oil for March delivery on the New York Mercantile Exchange settled lower by $1.45, or 1.5%, at $95.86 a barrel. Brent futures on the IntercontinentalExchange settled 19 cents, or 0.2%, lower at $117.66 a barrel.
The slide in oil prices contrasted with further gains in the benchmark U.S. gasoline contract. March reformulated gasoline blendstock futures, or RBOB, on the Nymex exchange settled 1.79 cents, or 0.5%, higher at $3.1345 a gallon. The price is up 15% from the front-month low for 2013 hit Jan. 15.
The RBOB gains came as many refineries were scaling back production amid maintenance work. Much of the price increases could be chalked to the upcoming switch to costlier summer-blended grades of gasoline in April, said Phil Flynn, analyst with Price Futures Group. Gasoline formulas are adjusted seasonally under the Clean Air Act to reduce smog formation when the weather warms up.
Heating oil futures were down 0.4% to $3.2104 a gallon.
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