NEW YORK (DTN) -- New York Mercantile Exchange oil futures reversed lower with the broader market after European Central Bank President Mario Draghi said risks to the Eurozone economic growth remain tilted to the downside, a comment that boosted the euro versus the dollar.
Draghi's call for patience after using measures to stimulate the region's economy with few results prompted negative reaction by investors. The euro rose while the dollar pared earlier losses, with oil trading inverse to the dollar. Optimism that had pushed up the oil market earlier in overnight trade eased as regular trade session got underway.
At last look, NYMEX June West Texas Intermediate crude futures dropped 58cts at $43.60 bbl, reversing off a 5-1/2-month spot high of $44.49. June Brent on the IntercontinentalExchange declined 53cts to $45.27 bbl, reversing off a near five-month high of $46.18.
In products trade, NYMEX May ULSD futures were down 0.92cts to $1.3230 gallon after reversing off a 4-1/2-month spot high of $1.3424, while the NYMEX May RBOB futures contract was up 0.07cts to $1.5075 gallon, reversing off a one-week spot high of $1.5247.
On Wall Street, equities reversed lower after ECB President Mario Draghi said at a news conference that rates will stay low for a long time, adding that the ECB stands to act if the situation deteriorates. He said inflation might go into negative before recovering.
Earlier, the oil market had risen to fresh highs after the dollar weakened and China posted improved oil demand data for March. Analysts also pointed to falling U.S. oil production and comments from the Organization of Petroleum Exporting Countries.
The oil market is expected to remain volatile for the rest of the session, analysts said.
China issued data showing its oil imports increased 21.6% to 7.7 million bpd in March versus a year ago that is the second highest import level on record, raising hope among oil futures speculators that a revival of China's economy would boost oil demand. China is reportedly taking advantage of low oil prices to add to its reserve stockpiles.
Analysts said continued decline in domestic production remains the main bullish factor driving oil futures prices, especially after Saudi Arabia over the weekend scuttled a plan that would have frozen output by members of the Organization of Petroleum Exporting Countries and non-OPEC producers at January levels.
OPEC Secretary-General Abdallah Salem el-Badri said this morning that the 13-member cartel will discuss oil production freeze at its June 2 meeting. The chief economist at the International Energy Agency, Fatih Birol, said this morning that with non-OPEC output falling, he expects the market to rebalance by 2017.
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