Friday, Jun 08, 2012
--Crude tumbles for second session on Fed disappointment
--Fed signals no imminent stimulus on the way
--OPEC to meet next week in Vienna
By Dan Strumpf
NEW YORK--Oil futures pushed lower for a second session Friday after hopes were dashed that the U.S. Federal Reserve would act soon to stimulate the economy of the world's biggest oil consumer.
Light, sweet crude for July delivery fell $2.07, or 2.5%, to $82.73 a barrel on the New York Mercantile Exchange. Brent crude on ICE Futures Europe dropped $1.88, or 1.9%, to $98.05 a barrel.
Futures sold off as disappointment over comments from Fed Chairman Ben Bernanke late Thursday sent investors flocking to the dollar. The ICE Dollar Index, which tracks the greenback against a basket of currencies, rose 0.7% to 82.802, its second daily rise in a row.
"The only thing that was going to save this market from collapsing was a bunch of stimulus," said Phil Flynn, analyst at Price Futures Group in Chicago. "We really didn't get the stimulus that the market was hoping for."
Mr. Bernanke said in testimony in Washington that the central bank remains "prepared to take action" to shore up the U.S. economy if stresses on the financial system worsen. But he stopped short of suggesting that any additional stimulus was imminent.
The Fed has sought to grease the economy twice in recent years by buying up bonds. The action essentially amounts to printing money, and tends to weaken the dollar and boost the price of dollar-denominated commodities like oil.
A stronger dollar, by contrast, tends to erode the price of oil by making the commodity more expensive for holders of other currencies.
Benchmark U.S. crude is down 2.7% over the last two sessions in the wake of disappointment over the lack of imminent Fed intervention. Analysts say any rally in crude increasingly hinges on additional action by the central bank, given the struggling U.S. economy and the deepening crisis in the euro zone.
The euro-zone crisis has attracted increasing attention from oil-market watchers because of concern that it will weaken economic growth and curb demand from oil. On Friday, the U.S. Commerce Department said U.S. exports to euro-zone countries fell 9.8% in April, while imports fell 11.2%.
Next week, market watchers will likely shift their attention to a meeting in Vienna of the Organization of Petroleum Exporting Countries for the latest clues on output in the producing bloc.
Front-month July reformulated gasoline blendstock, or RBOB, recently traded 3.86 cents, or 1.4%, lower at $2.6464 a gallon. July heating oil dropped 2.14 cents, or 0.8%, to $2.6457 a gallon.
Write to Dan Strumpf at firstname.lastname@example.org.
(END) Dow Jones Newswires
June 08, 2012 09:37 ET (13:37 GMT)