Crude Oil Prices Retreat Amid Decline in U.S. Consumer Confidence

Strategic Insights -

Crude oil prices retreated Tuesday after a decline in U.S. consumer confidence raised questions about the strength of petroleum demand. Light, sweet crude for August delivery traded $1.91, or 2.7%, lower at $69.58 a barrel on the New York Mercantile Exchange. The rally in crude prices earlier in the day was attributed to end-of-quarter book-squaring and automatic buy orders, but the gains were short-lived as U.S. trading opened. The Conference Board reported its consumer confidence index slipped in June, which led to a decline in crude prices.

Key Takeaways:

  • Crude oil prices retreated 2.7% to $69.58 a barrel on the New York Mercantile Exchange after a decline in U.S. consumer confidence.
  • The rally in crude prices earlier in the day was attributed to end-of-quarter book-squaring and automatic buy orders.
  • The Conference Board reported its consumer confidence index slipped in June, which led to a decline in crude prices.
  • Stephen Schork, editor of the Schork Report energy markets newsletter, commented that some "green shoots" are starting to get "brown."
  • Oil prices have soared in the second quarter, but the rise in prices has been dogged by doubt due to weak consumption.
  • The International Energy Agency lowered its oil demand growth forecast for the next several years.
  • China confirmed it will increase retail gasoline and diesel prices effective Tuesday, which represents rises of around 8% to 10% over current benchmarks.

Statistics:

  • Crude oil prices fell $1.91, or 2.7%, to $69.58 a barrel on the New York Mercantile Exchange.
  • Brent crude on the ICE futures exchange fell $1.95, or 2.8%, to $69.04 a barrel.
  • The Standard & Poor's 500 stock index was recently down more than 10 points to 916.96.
  • Crude oil prices have soared in the second quarter, with a 3% gain in the previous trading session.
  • China's oil demand growth is expected to fall slightly this year, according to the International Energy Agency.

Sources:

  • Dow Jones Commodities News via Comtex (2009)
  • Conference Board (2009)
  • Schork Report (energy markets newsletter)
  • Morgan Stanley (commodities trader at Standard Chartered in New York)
  • Peter Donovan (vice president of brokerage Vantage Trading in New York)
  • International Energy Agency (IEA)
  • Dow Jones Newswires
  • New York Mercantile Exchange (NYMEX)
  • ICE Futures Exchange