Oil Market Summary for 06/14/2010 to 06/18/2010
Crude oil futures held on to strong gains for the week in lackluster Friday trading, after higher-than-expected inventories earlier in the week threatened to cut short the rally.
At the same time, with the front-month July contract set to expire on Tuesday, analysts didn't see much incentive for prices to move above current levels next week.
The benchmark West Texas Intermediate contract settled at $77.18 a barrel on Friday, locking in a gain of 4.6% for the week, compared with $73.78 a week earlier. The August contract, which becomes the benchmark on Wednesday, settled at $78.26 a barrel.
The weekly inventory report from the Energy Information Administration on Wednesday showed crude stocks increased 1.69 million barrels in the week ended June 11, compared with the consensus forecast for a decline of 1.3 million barrels.
Futures markets initially shrugged off the report, and, spurred by a rising stock market, pushed prices up on Wednesday to a $77.67 high for the week. Doubts set in again on Thursday, and the price fell below $77 a barrel before recouping some of the ground on Friday.
A new report put out under the aegis of the Organisation for Economic Co-operation and Development, the Paris-based grouping of industrial countries, purported to establish that increased trading by index funds did not contribute to price volatility in futures markets.
The report was authored by two Illinois university professors, Scott Irwin and Dwight Sanders, who have build an academic career on debunking the notion that speculation causes volatility. Not surprisingly, they found once again in their new study that there was "no evidence" to establish a link between large inflows of capital into commodity investment funds and increased volatility in crude oil prices.
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