--Oil sinks on economic woes
--Crude pares losses late in session
--Attention likely to shift to OPEC next week
By Dan Strumpf
NEW YORK--Oil prices neared eight-month lows Friday as concerns
over global energy demand deepened amid worries over economic
growth in the U.S. and Europe.
Disappointment over the U.S. Federal Reserve's apparent lack of
commitment to immediate stimulus was the main driver of Friday's
selloff, traders said. Elevated U.S. crude inventories and
expectations that the world's biggest oil producers would keep
output at a three-year high also weighed.
"The only thing that was going to save this market from
collapsing was a bunch of stimulus," said Phil Flynn, analyst at
Price Futures Group in Chicago. "We really didn't get the stimulus
that the market was hoping for."
But crude-oil futures came off their intraday lows late in the
day, after reports that top European officials were exploring ways
to shore up Spain's ailing banks, with light, sweet crude for July
delivery finishing 72 cents, or 0.9%, lower at $84.10 a barrel on
the New York Mercantile Exchange. Nymex crude rose 87 cents on the
week, after spending several days rising on expectations of a Fed
move.
Brent crude on the ICE Futures Europe exchange fell 46 cents, or
0.5%, to $99.47.
In the U.S., traders remained wary of buying crude a day after
Federal Reserve Chairman Benjamin Bernanke said the central bank
remains "prepared to take action" to shore up the U.S. economy but
stopped short of suggesting that any additional stimulus was
imminent.
Previous actions by the Fed have weakened the dollar, boosting
the price of dollar-denominated commodities like oil because they
become cheaper for foreign buyers.
The oil market has shown signs that it is increasingly
well-supplied recently. In the U.S., stockpiles remain near their
highest levels since 1990, and gasoline inventories surged 3.3
million barrels in the week ended June 1, according to the Energy
Information Administration.
The EIA said Friday that U.S. oil output in the first quarter
rose 11.6% from a year earlier, topping 6 million barrels a day for
the first time in 14 years.
Meanwhile, the burden for motorists at the pump has been easing.
July gasoline futures on Friday settled 0.02 cent higher at $2.6852
a gallon, and are off 21% from their 2012 highs reached in
March.
At the pump, a gallon of regular gasoline currently fetches
$3.56 a gallon, according to auto club AAA, down 24 cents from a
month ago.
Attention next week is likely to shift to Thursday's meeting of
the Organization of Petroleum Exporting Countries in Vienna.
OPEC most recently said it was pumping 32.42 million barrels a
day of oil, a level not seen since the summer of 2008, and has
acknowledged that it is producing more oil than the market
needs.
However, market observers said the bloc may choose to keep
output high as tightening sanctions reduce oil output in Iran. The
country is OPEC's second-largest producer behind Saudi Arabia,
which has boosted output to account for the decline in Iranian
exports. In addition, despite the recent decline in prices, Brent
crude, the European benchmark, is still trading around $100 a
barrel, a level most OPEC members say is acceptable.
"Everybody is anticipating status quo" at the OPEC meeting, said
Dominick Chirichella, analyst at the Energy Management Institute, a
consultancy. "I don't think the Saudis are going to be willing to
do anything other than what they're doing."
Separately, exchange-operator CME Group Inc. said it fined
Morgan Stanley (MS) $50,000 for allegedly overstating its open
interest in a crude-oil contract one day before the contract's
expiration in November 2011.
Morgan Stanley declined to comment. It was the second penalty
the bank has faced this week in commodities trading after
regulators said they reached a $5 million settlement with the bank
over allegedly improper trades of several off-exchange futures.
July heating oil settled 0.5 cent, or 0.2%, higher at $2.6721 a
gallon.
More information on settlements and highs and lows for futures
on Nymex and ICE platforms can be found by searching for the
following headlines:
Nymex Light Crude Oil Close
Nymex Harbor RBOB Gasoline Close
Nymex Heating Oil Close
ICE Brent Crude Oil Close
ICE Gas Oil Close
--David Bird contributed to this article.
Write to Dan Strumpf at dan.strumpf@dowjones.com