NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled lower Thursday afternoon on growing pessimism about the eurozone economy and oil demand as the Greek debt saga remains unresolved.
A buildup in gasoline stocks in the United States also added to selling pressure on the oil futures complex, although the downside was curbed by positive U.S. economic data released this morning.
A crucial meeting in Brussels between Athens and its creditors, the fourth such meeting within the past week, ended Thursday without progress. A fifth meeting is planned for Saturday to bridge the gap, with German Chancellor Angela Merkel calling for a deal before markets reopen on Monday if Greece is to avoid a default.
Greece has until June 30 to pay its $1.8 billion debt to the International Monetary Fund, but it wouldn’t be able to do so without financial support from the creditors. That’s why talks over the next several days are crucial for euro-zone growth prospects, analysts said, adding that anxious investors exited long positions Thursday because oil demand could be reduced by Greek debt contagion.
“Oil prices are being held back because of concerns about Greece,” said analyst Phil Flynn at Price Futures Group. “The stalemate is depressing prices because it threatens to unleash turmoil that could destroy what has been an improving demand outlook.”
NYMEX August WTI contract settled down 57 cents at $59.70 bbl, off a three-day low $59.43. ICE August Brent futures settled 29 cents lower at $63.20 bbl, off a three-day low of $62.72. The Brent premium over WTI widened 28 cents to $3.50 bbl at the close.
In products trade, the NYMEX July ULSD futures contract eased 1.38 cents to a $1.8623 gallon settlement, off a three-day low at $1.8525. NYMEX July RBOB futures slipped 1.87 cents to $2.0368 gallon at settlement, off a two-day low of $2.0137.
On Wall Street, U.S. equities were lower Thursday afternoon as concerns about Greece partly offset data from the Commerce Department saying U.S. personal income rose 0.5% in May while personal spending jumped 0.9% for the same month, the biggest increase in nearly six years. Weekly jobless claims, a gauge of layoffs, rose 3,000 to 271,000, the Labor Department said.
On supply, the Energy Information Administration reported Wednesday crude oil stocks fell 4.9 million bbl last week but also showed a surprise 680,000 bbl increase in gasoline stockpiles while distillate supplies increased 1.84 million bbl for the week. Distillate fuel demand plummeted 509,000 bpd last week.
In the background, traders are also keeping a watchful eye on nuclear talks with Iran. A comprehensive Iran nuclear agreement that was set for June 30 now looks unlikely after Iran's Supreme Leader Ayatollah Khamenei ruled out a long-term freeze on nuclear research and intrusive inspections as demanded by six world powers.
Without a deal, sanctions on Iran's oil industry won't be lifted, which means no extra Iranian oil flowing to the global market.
George Orwel can be reached at email@example.com
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