Crude prices ended lower on Friday as Greece and its international creditors pushed bailout talks to next week after failing to reach an agreement and traders braced themselves for the looming deadline on Iran’s nuclear talks.’
Light sweet crude for July delivery ended 84 cents or 1.4% lower at $59.61 a barrel on the New York Mercantile Exchange. Tracking the most active contracts, the US benchmark ended 0.6% lower on the week.
Brent for August delivery, the global benchmark, ended $1.24 or 1.9% lower at $63.02 a barrel on the London based ICE futures exchange. Tracking the post active contracts, prices were down 1.6% on the week.
“Most dramatic cutbacks are past. It wasn’t any sort of seismic shift,” John Saucer, vice president of research and analysis at Mobius Risk Group in Houston, told the Wall Street Journal.
“Today was another day that crude is just following the dollar-euro cross.”
Oil futures fell after deliberations aimed at preventing a potential Greek default and exit from the Euro ended in acrimony boosting the value of the dollar against a basket of foreign currencies.
A stronger dollar is bearish for the demand of commodities denominated in dollars like oil as it makes them harder top afford to holders of foreign currencies.
“With Greece threatening to go off the rails, you’re seeing a flight to quality,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, told Bloomberg by phone.
“If Greece were to actually leave the euro zone, oil would get a one-two punch. The European economy would take a hit, hurting demand, and the dollar would probably increase.”
Also weighing on the prices were worries by traders that Saudi Arabia, the world’s biggest exporter of crude, would increase its maximum output levels.
Saudi Arabia oil minister Ali al Naimi was reported saying on Thursday that the kingdom was ready to increase its output level if a rise in demand was reported.
The minister added that the kingdom had between 1.5 and 2 million barrels of spare production every day that they could pump if demand rose.
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