Oil slips from 14-month high on firmer dollar

By Sara Sjolin and Carla Mozee, MarketWatch
LONDON (MarketWatch) — Benchmark U.S. crude-oil futures retreated from its highest level in more than a year on Monday, as a firmer dollar added pressure on prices, although unrest in Egypt helped limit the losses.

Crude for August delivery CLQ3 -0.42% slipped 18 cents, or 0.2%, to $103.04 a barrel, pulling back from last week’s leap of 6.9%, the largest weekly percentage gain since late February 2011, according to FactSet data.

The losses on Monday came as the U.S. dollar rose against the euro and other currencies, keeping the ICE dollar index DXY -0.04% around a three-year high. A stronger greenback can hurt dollar-denominated oil prices by making oil futures more expensive for holders of other currencies.

Oil prices, however, remained above $103 a barrel as focus firmly remained on supply concerns in the Middle East, after Egypt’s new leaders late Saturday said they hadn’t named opposition figure Mohamed ElBaradei as Egypt’s interim prime minister, underscoring political instability in the country.

Reuters Enlarge Image
Following the ouster of Egyptian President Mohammed Morsi (pictured in a portrait above), oil traders are watching for further turmoil in the North African nation.
Egypt controls the key Suez Canal and an adjacent pipeline used to transport a significant amount of the region’s oil trade.

ElBaradei is a leader of secular groups that opposed Mohammed Morsi, who was ousted last week as Egypt’s president in the wake of massive protests. Oil prices last week climbed to more than $100 a barrel after Morsi rejected calls to resign.

Clashes between Morsi supporters and critics have left more than 30 people dead, according to various reports.

On Friday, oil prices advanced 2% to the highest settlement price for a front-runner contract in 14 months at $103.22 a barrel, finding support after a larger-than-expected 195,000 new jobs were added to the U.S. economy in June, raising prospects for energy demand.

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Meanwhile, flows to energy-sector funds ending July 3 exceeded $2 billion for the first time since the first quarter of 2011, against “a backdrop of fresh turmoil in Egypt, still improving U.S. economic data and declining oil production in Mexico, Venezuela and Nigeria,” fund tracker EPFR said Friday.

Elsewhere in the energy complex, August futures for benchmark Brent oil UK:LCOQ3 -0.55% dropped 57 cents, or 0.5%, at $107.15 a barrel on Monday. They finished Friday’s session up 2.1% on ICE Futures. Last week, prices rose 5.2%.

In other trading Monday, August gasoline RBQ3 +0.24% slipped a penny to $2.88 a gallon, and August heating oil HOQ3 -0.25% fell one cent to the $2.98-a-gallon level.

August natural gas NGQ13 +1.60% rose 4 cents, or 1.2%, to $3.65 per million British thermal units.

Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.
Carla Mozee is a reporter for MarketWatch, based in Los Angeles. Follow her on Twitter @MWMozee.

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