News Column

Crude Oil Ends Lower As Ukraine Tensions Persist

July 18, 2014

WASHINGTON (Alliance News) - US crude oil snapped a two-day gain to end slightly lower Friday, as supply disruption concerns persisted. Oil prices surged two % yesterday on escalating tensions following a Malaysian Airlines passenger jet crash, shot down in eastern Ukraine near the border with Russia.

Nonetheless, the downtrend was limited with investors weighing a significant drop in US crude oil stockpiles last week. Oil prices also found support with the ongoing turmoil in the Middle East with Israel sending ground troops into Gaza and persistent geopolitical tensions over the shooting down of a Malaysian Airlines passenger jet close to the Russia-Ukraine border. All 298 people onboard were killed in the crash.

In economic data from the US, a Thomson Reuters and University of Michigan report showed consumer sentiment to have unexpectedly deteriorated in July, with the Conference Board's leading economic index rising less than expected in June.

Worries over the impact of new and tougher US sanctions on some major Russian banks and energy firms including major oil producer Rosneft on the global economy are also contributing to oil's uptick.

Light Sweet Crude Oil futures for August delivery, the most actively traded contract, dipped USD0.06 to close at USD103.19 a barrel on the New York Mercantile Exchange Friday.

Crude prices for August delivery scaled a high of USD103.94 a barrel intraday and a low of USD102.58.

On Thursday, crude oil soared 2% after the crash of a Malaysian Airlines passenger jet in Ukraine raising geopolitical concerns to a new level. The weekly official crude inventory data from the US Energy Administration that showed a notable drop in oil stockpiles last week, also contributed to oil's surge.

The dollar index, which tracks the US unit against six major currencies, traded at 80.55 on Friday, up from its previous close of 80.53 late Thursday in North American trade. The dollar scaled a high of 80.69 intraday and a low of 80.48.

The euro traded lower against the dollar at USD1.3523 on Friday, as compared to its previous close of USD1.3526 late Thursday in North American trade. The euro scaled a high of USD1.3535 intraday and a low of USD1.3492.

In economic news from the US, a report from Thomson Reuters and the University of Michigan showed consumer sentiment to have unexpectedly deteriorated in the month of July, coming in at 81.3, compared to the final June reading of 82.5. Economists had expeced the consumer sentiment index to edge up to a reading of 83.0.

Meanwhile, the Conference Board said that its leading economic index rose 0.3% in June, following an upwardly revised 0.7% increase in May. Economists had been expecting the index to climb by 0.5%, matching the increase originally reported for the previous month.

In China, new house prices in most cities declined in June, data from the National Bureau of Statistics showed Friday. Average new home prices in 55 of the 70 cities in China declined compared to the previous month.

Meanwhile, the euro area current account surplus declined in May as income and surplus on visible trade decreased from April, the European Central Bank said Friday. The current account surplus dropped to a seasonally adjusted EUR 19.5 billion from EUR 21.6 billion in April.

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Source: Alliance News

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