The hot summer months do take their tollJuly 5, 2015 12:00
Oil slips, choppy on way to third weekly loss
EU working on contingency plan for Greece exit; Seaway oil to flow this weekend after reversal; Investors eye weekend G8 meeting, Iran nuclear talks next week
May 20, 2012 9:43 by Reuters
Brent crude dipped on Friday in choppy trading after recovering from a 2012 low as the euro rallied from a four-month low, but oil remained on track a third straight weekly loss as Greece’s political turmoil kept concerns about the euro zone in focus.
Position squaring after this week’s expiration of Brent’s June contract and U.S. June crude options and caution ahead of the weekend’s Group of Eight meeting limited oil losses, traders and analysts said.
U.S. crude prices fell more, but also in choppy trading, also headed for a third weekly slide.
Also in focus is this weekend’s planned start of crude oil flows on the reversed Seaway pipeline.
The reversal is intended to ease a glut of crude in the U.S. Midwest by bringing it via Seaway to the refinery-rich Gulf Coast and reducing Brent’s premium to its U.S. counterpart.
Oil and the euro felt pressure from news that European officials were working on contingency plans in case Greece exits the euro zone.
Helping push oil lower earlier was data showing Chinese home prices in April fell for a second month in a row from year ago levels.
“The problems in Europe, highlighted by the political instability in Greece, remain as the primary factor for today’s slide in oil prices,” said Kyle Cooper, managing partner at IAF Advisors in Houston.
“There is also a factual realization that the Chinese economy is slowing and that’s bad for oil demand,” Cooper added.
Brent July crude stood only 33 cents lower at $107.16 a barrel by 2:21 p.m. EDT (1821 GMT), having fallen to a 2012 low of $106.40, lowest intraday price since Dec. 21, and on pace to post a 4-percent weekly loss.
U.S. June crude was down $1.00 at $91.56, after dropping to $91.40, the lowest intraday price since Nov. 3. U.S. crude also faced a 4-percent weekly drop.
The U.S. June contract expires on Tuesday.
The choppy trading trajectories widened the Brent/U.S. crude spread, with Brent’s premium higher above $15 a barrel based on July crude contracts.
Tepid total crude trading volumes assisted the tug-of-war trading, with both Brent and U.S. turnover more than 20 percent below their 30-day averages.
U.S. RBOB gasoline futures managed a modest gain, up 1.44 cents at $2.8926 a gallon, climbing back above its 200-day moving average after ending the previous session below that level for the first time since February.
Differentials for RBOB in the New York Harbor cash market rose and were above the futures benchmark on Thursday on lift from strong buying interest after a fire damaged a crude unit at Sunoco’s Philadelphia refinery last week, though it was slated to restart on Wednesday.
Gasoline has tumbled from its $3.4455 a gallon peak 2012 peak reached March 29.
Gasoline stocks independently held in the Amsterdam-Rotterdam-Antwerp oil hub jumped by 34 percent over the past week, independent oil analyst Patrick Kulsen said, citing improved refining margins for prompting higher production.
DIPLOMATIC WILD CARDS
In addition to addressing Europe’s economic problems stemming from the euro zone debt crisis at this weekend’s G8 summit, U.S. President Barack Obama will seek support for tapping strategic oil reserves ahead of the EU’s July embargo of Iranian crude, according to a Kyodo news report.
Success of such a diplomatic effort would add to pressure on Iran, already feeling the pinch of tightening sanctions on its crude oil exports, ahead of next week’s scheduled talks with major powers aboutTehran’s disputed nuclear program.
Higher production from Saudi Arabia and Iraq has already helped countries seeking alternatives as they reduce purchases of Iranian oil and has contributed to a sharp rise in U.S. crude oil inventories. (Additional reporting by Gene Ramos in New York, Claire Milhench in London and Florence Tan in Singapore)