Oil prices dropped below $76 a barrel today as the dollar strengthened and investors awaited second-quarter company earnings reports for clues about the strength of the U.S. economy.
By early afternoon in Europe, benchmark crude for August delivery was down 46 cents to $75.63 a barrel in electronic trading on the New York Mercantile Exchange. The contract added 65 cents to settle at $76.09 on Friday.
Oil prices rose sharply last week on investor optimism that the U.S. economy, while likely to slow, won’t slip into recession later this year.
“The bottom line is that the economic recovery is slowing down sooner than many analysts expected,” energy consultant and trader The Schork Group said in a report. “But we will take a slow recovery over no recovery any day of the week.”
Traders will be eyeing closely second quarter corporate earnings season, beginning this week with reports from Alcoa Inc., Intel Corp., Google Inc., JPMorgan Chase & Co., Bank of America Corp.
Oil investors often look to equities as a barometer of overall investor sentiment, and all major Asian and most European stock markets rose today after the Dow Jones industrial average jumped 5.3 percent last week.
A stronger dollar helped keep oil prices in check by making crude more expensive for investors holding other currencies.
The euro was down to $1.2565 on Monday from $1.2647 late Friday in New York, while the British pound fell to $1.5008 from $1.5067.
On the bullish side, a report from Commerzbank in Frankfurt cited official data from China showing crude oil imports rising by a monthly 25 percent in June, to 5.42 million barrels a day.
“China remains the fundamental pillar of global oil demand,” Commerzbank said. “How long this demand dynamics can be sustained, remains to be seen in view of the latest signals for a slowdown of the Chinese economy.”
In other Nymex trading in August contracts, heating oil fell 0.93 cents to $2.0164 a gallon, gasoline dropped 1.26 cents to $2.0574 a gallon and natural gas was steady at $4.401 per 1,000 cubic feet.
In London, Brent crude was down 47 cents to $74.95 a barrel on the ICE Futures exchange.