Oil settles below $75 ahead of earnings

By Brian Ellsworth

NEW YORK (BestGrowthStock) – U.S. crude oil futures fell below $75 per barrel on Monday on profit-taking ahead of earnings season, following gains in the previous three sessions.

Crude benefited from a broad rally by the U.S. dollar sparked by concerns about European banks, while seesawing equities provided little direction for petroleum markets amid little news about economic and supply fundamentals.

A firmer dollar often pushes commodities down as it makes them more expensive for holders of other currencies.

Crude for August delivery settled down $1.14, or 1.5 percent, to $74.95 a barrel after closing last week with a gain of more than 5 percent, — its biggest weekly jump since May. Brent crude was down $1.05 at $74.37 a barrel.

“(It was) just profit-taking and absence of direction in the equities markets,” said Tom Knight, a trader with Truman Arnold, in Texarkana, Texas. “There is very little market moving news right now. Everyone is waiting for corporate earnings.”

Stocks slumped early in the session over concerns about European banks, but by late trade had rallied into positive territory.

The Dow Jones industrial average (.DJI: ) was up 0.18 percent, while the Standard & Poor’s 500 Index (.SPX: ) was up 0.04 percent. The U.S. dollar (.DXY: ) rallied 0.35 percent as concerns about Europe’s finances weighed on the euro.

Traders looked ahead to quarterly U.S. company earnings that begin late Monday, as well as U.S. retail sales and industrial production data later this week that will help gauge the strength of the U.S. economic recovery.

“We’re at a mid-range valuation now after people got a little bit excited last week,” said Tim Evans, an analyst with Citi Futures in New York.” We still lack any strong bullish fundamentals.”

Oil rose of 5.5 percent last week, the largest weekly gain since the week to May 28. It rose on Monday to as high as $76.43 per barrel following figures showing a 43.9 percent surge in Chinese exports in June from a year earlier.

Crude imports in the world’s second-largest energy user rose by a quarter to hit a record high above 22 million tonnes.

VOLATILITY FALLING

The market is close to the average closing price over the last year, now around $75.50. U.S. crude is well below a 19-month peak above $87 reached in early May but has rebounded sharply from below $65 on May 20.

Implied volatility for U.S. crude has fallen to around 31 percent after hitting a peak above 45 percent in May.

Investors have unwound long positions in the past couple of weeks, implying less confidence with the economic outlook.

Net speculative long positions on NYMEX crude were cut by nearly 20,000 to 55,116 in the week to July 6, data from the Commodity Futures Trading Commission on Friday showed, the third week of falls.

(Additional reporting by Gene Ramos in New York, Osamu Tsukimori and Florence Tan; Editing by Lisa Shumaker and Sofina Mirza-Reid)

Oil settles below $75 ahead of earnings