Oil Falls On More EU Fears

Published on Thursday, 28 June 2012 17:39 Written by Todd Shriber

As the much-anticipated European Union summit kicked off today in Brussels, traders once again pondered whether or not any major reforms would emerge from the two-day confab. Apparently, traders are doubtful regarding any positive outcome and those worries sent oil prices tumbling today. NYMEX-traded futures for August delivery lost $2.52, or 3.1%, to close at $77.69 per barrel. That decline came as the PowerShares DB US Dollar Index Bullish (NYSE: UUP) found its way to a modestly higher finish.

Oil prices tumbled also tumbled after the U.S. Supreme Court opted in favor of upholding most of the Affordable Care Act, also known as Obamacare. The most sweeping health care legislation seen in the U.S. in generations has been controversial to say the least and oil prices’ correlation to the law seems suspect at best.

In economic news, new claims for jobless benefits fell to 386,000 last week from 392,00 in the previous week. Economists expected a reading of 385,000 new claims. The Commerce Department said its final reading of U.S. first-quarter GDP showed growth of 1.9%. That was inline with what economists expected.

Natural gas futures snapped a five-day upswing after inventories data showed a larger-than-expected increase. The U.S. Natural Gas Fund (NYSE: UNG) lost three-quarters of a percent, but that ETF has still gained over 8% in the past week. Shares of Oklahoma-based Chesapeake Energy (NYSE: CHK), the second-largest U.S. natural gas producer, fell 0.84% on volume that was below the daily average.

Looking at other oil equities, it was a rough day for stocks in general, though a late-day rally pared what could have been grizzly losses for many sectors. Exxon Mobil (NYSE: XOM) closed with a small loss, finishing well above its lowest levels of the day. Chevron (NYSE: CVX) was able to eke out a positive close.

BP (NYSE: BP), Europe’s second largest oil company, gained three-quarters of a percent a day after the company announced more asset sales. The British oil giant will sell some North Sea fields and some assets in Wyoming.

Petrobras (NYSE: PBR), Brazil’s state-run oil giant, closed higher by three cents, but don’t be impressed. That downtrodden stock touched another new 52-week low earlier in today’s session.

On above average turnover, the Energy Select Sector SPDR (NYSE: XLE) posted a positive end to the day, but that ETF is still down by more than 2% in the past week.