June 8 (Bloomberg) -- Crude oil fell for a second day, following global equities lower, as a stronger dollar reduced the appeal of commodities as an alternative investment.
Prices declined after stocks dropped and the U.S. currency gained against the euro. The stronger currency undermines demand for dollar-priced assets such as oil and gold. Oil futures touched a seven-month high of $70.32 on June 5 after a Labor Department report showed the fewest job losses in eight months.
“The fundamentals don’t support these prices,” said Michael Fitzpatrick, a vice president for energy at MF Global Ltd. in New York. “A stronger dollar takes away one of the supporting factors behind the recent rally.”
Crude oil for July delivery fell 35 cents, or 0.5 percent, to settle at $68.09 a barrel at 3:04 p.m. on the New York Mercantile Exchange. Futures are up 53 percent this year.
Prices rose in electronic trading as equities rebounded. Crude oil increased 15 cents to $68.59 a barrel at 3:28 p.m. The Standard & Poor’s 500 Index was down 0.9 percent and the Dow Jones Industrial Average slipped 1 percent at 2:30 p.m. when floor trading ended.
The dollar advanced 0.5 percent to $1.3905 per euro from $1.3968 on June 5. It touched $1.3806, the highest level since May 28.
“Crude oil has shown a great sensitivity to the wider financial market this year,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The market fundamentals will become more important now that prices are around $70 a barrel. We’ve seen a big rally on slightly improved data and will need to see more.”
Inventory Survey
Analysts were split over whether crude-oil stockpiles rose or declined last week. Supplies were probably unchanged at 366 million barrels, according to the median of eight respondents in a Bloomberg News survey. Four analysts forecast a decline and four said there was an increase. more...
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