Oil Falls as Higher Supplies and Greece Pressure Crude

Oil fell toward $63 a barrel on Friday as concern over Greece and a forecast that U.S. shale oil output would keep growing this year countered signs of a pickup in demand.

Greece has been less of a driver for oil than other markets such as equities, but analysts said the situation represented a bearish risk heading into the weekend. Euro zone leaders will hold an emergency summit on Monday to try to avert a Greek default.

Brent crude LCOc1 for August had dropped $1.00 to $63.26 as of 9.45 a.m. EDT, while U.S. crude for July CLc1 was down 78 cents at $59.67. Both contracts made gains on Thursday.

“Oil markets are not pricing much in terms of Greek risk but most of the European oil demand growth this year is coming from the southern countries,” said Olivier Jakob of Petromatrix in Zug, Switzerland.

“Therefore, if there was a Greek default and a contagion of a risk premium to other southern European countries it could have a negative impact on European oil demand.”

Saudi Arabian oil minister Ali al-Naimi said he was optimistic about the market in coming months, given increased demand and falling inventories, state media reported on Thursday. U.S. crude stocks declined in the latest week.

via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza