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Oil falls as 4-week rally stalls
Source: Agencies |
June 23, 2010, Wednesday
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OIL prices fell yesterday as the euphoria over China's decision to let its currency appreciate waned.
A stronger yuan would cut oil prices in China and, presumably, boost consumption. Some analysts feared, though, that a higher yuan could mean fewer exports, which could slow the Chinese economy.
The world's oil producers have been selling more crude to China, India and other fast-growing economies as demand in the U.S. continues to be weak coming out of the Great Recession.
Benchmark crude for July delivery lost 61 cents to settle at US$77.21 on the New York Mercantile Exchange. Yesterday was the last day of trading in July oil and most interest had moved to the August contract, which dropped 76 cents to settle at US$77.85 a barrel.
Oil has jumped from US$64 a barrel on May 25 on optimism Europe's debt crisis won't stymie the global economic recovery.
Goldman Sachs cut its crude forecasts, but still expects prices to rise this year as the global economy grows an estimated 4.9 percent in 2010. Goldman now expects prices to rise to US$87 a barrel in three months, down from last month's forecast of US$96.
Prices advanced to as high as US$78.92 a barrel Monday on investor expectations China's move over the weekend to strengthen its currency would boost crude demand.
Societe Generale said it expects the yuan to gain between 3 percent and 5 percent by the end of the year, not enough to spark significant new consumption in China.
"Chinese demand has already exceeded expectations; it has been strong and we had already forecast it to continue that way," the firm said in a report. "We simply do not expect a modest appreciation in the yuan to make any appreciable difference in demand."
Societe Generale forecasts crude will average US$80 a barrel in the third quarter and US$85 in the fourth.
In other trading, heating oil fell 3.30 cents to settle at US$2.1129 a gallon, and gasoline gave up 0.93 cent to settle at US$2.1335 a gallon.
Natural gas fell 11.7 cents to settle at US$4.756 per 1,000 cubic feet. It hit a four-month high of US$5.20 per 1,000 cubic feet last week.
Brent crude lost 78 cents to settle at US$78.04 on the ICE futures exchange.
A stronger yuan would cut oil prices in China and, presumably, boost consumption. Some analysts feared, though, that a higher yuan could mean fewer exports, which could slow the Chinese economy.
The world's oil producers have been selling more crude to China, India and other fast-growing economies as demand in the U.S. continues to be weak coming out of the Great Recession.
Benchmark crude for July delivery lost 61 cents to settle at US$77.21 on the New York Mercantile Exchange. Yesterday was the last day of trading in July oil and most interest had moved to the August contract, which dropped 76 cents to settle at US$77.85 a barrel.
Oil has jumped from US$64 a barrel on May 25 on optimism Europe's debt crisis won't stymie the global economic recovery.
Goldman Sachs cut its crude forecasts, but still expects prices to rise this year as the global economy grows an estimated 4.9 percent in 2010. Goldman now expects prices to rise to US$87 a barrel in three months, down from last month's forecast of US$96.
Prices advanced to as high as US$78.92 a barrel Monday on investor expectations China's move over the weekend to strengthen its currency would boost crude demand.
Societe Generale said it expects the yuan to gain between 3 percent and 5 percent by the end of the year, not enough to spark significant new consumption in China.
"Chinese demand has already exceeded expectations; it has been strong and we had already forecast it to continue that way," the firm said in a report. "We simply do not expect a modest appreciation in the yuan to make any appreciable difference in demand."
Societe Generale forecasts crude will average US$80 a barrel in the third quarter and US$85 in the fourth.
In other trading, heating oil fell 3.30 cents to settle at US$2.1129 a gallon, and gasoline gave up 0.93 cent to settle at US$2.1335 a gallon.
Natural gas fell 11.7 cents to settle at US$4.756 per 1,000 cubic feet. It hit a four-month high of US$5.20 per 1,000 cubic feet last week.
Brent crude lost 78 cents to settle at US$78.04 on the ICE futures exchange.
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