Oil Opens Lower Under Pressure from USD

NEW YORK (DTN) -- New York Mercantile Exchange oil futures opened lower Friday morning under pressure from a strengthening U.S. dollar and fears the Greek crisis could hurt demand, though investors also are worried about geopolitical risks after terrorist attacks occurred Friday in France, Tunisia and Kuwait.

At 8 a.m. CDT, the NYMEX August WTI contract opened down 75 cents at $58.95 bbl, near a two-week spot low of $58.94. ICE August Brent futures opened 56 cents lower at $62.64 bbl, near a four-day low of $62.50. The Brent premium over WTI widened 17 cents to $3.67 bbl at the open.

In products trade, the NYMEX July ULSD futures contract eased 1.03 cents to a three-week low at $1.8520 gallon open while NYMEX July RBOB futures dropped 1.68 cents to a three-day low $2.02 gallon open.

On Wall Street, U.S. equities edged higher while the dollar edged up to a three-day high versus the euro, as stalled progress in talks between Greece and its creditors discouraged investors from making any big moves.

There’s growing pessimism about the eurozone economy and oil demand as the Greek debt saga remains unresolved. Eurozone leaders, after missing several deadlines for Greece to accept a reform-for-bailout plan, have scheduled a last-ditch meeting for Saturday to break the standoff between Athens and its creditors before a June 30 deadline for Greece to make a $1.8 billion repayment to the International Monetary Fund.

Short-term oil supply and demand fundamentals were mostly bearish for the week-ended June 19. The U.S. Energy Information Administration detailed a surprise 680,000 bbl rise in gasoline stocks. Distillate fuel supplies increased 1.84 million bbl, as demand for the fuel plummeted 509,000 bpd, EIA added.

On crude supply, EIA reported a 4.9 million bbl crude stock draw, but roughly 400,000 bbl of the draw was crude moved from commercial inventory into the Strategic Petroleum Reserve, which is operated by the U.S. Department of Energy.

On the geopolitical front, suspected terrorists attacked an American-owned gas plant near Lyon, France, earlier Friday morning, killing one person and injuring two. The incident brought back memories of the attack on satirical magazine Charlie Hebdo earlier this year.

Elsewhere, a Spanish-owned beach hotel in Tunisia was attacked, killing 27 tourists and injuring scores of others. In Kuwait, a Shiite Mosque attack also left 16 dead, with the Islamic State claiming responsibility.

Crisis government security meetings are currently underway in France and in Britain in response to the attacks in France and Tunisia, AP reported.

George Orwel can be reached at george.orwel@telventdtn.com

(BAS)