Crude oil fell in trading Monday on the New York Mercantile Exchange, following a down trend on the Dow Jones. Ultimately dropping 76 cents to settle below $67, the price of crude actually rallied toward the end of the day to recover some of its earlier losses.
With intra-day trading dipping to $65.23, crude oil managed to lose only 76 cents in trading Monday to close at $66.75 on the NYMEX. Negatively affected by a loss of 200 points on the Dow Jones, the price of crude dropped nearly $2 at the beginning of the day, but it gained some strength on renewed commercial interest in gasoline later Monday.
"Early on we saw it drop over $2, which was not that surprising because we had selling coming from both sides of the market," explained Darin Newsom, senior analyst with DTN, a market information service in Omaha, Nebraska. "We had the Dow down over 200 points; so we had non-commercial traders getting out of these markets, not just crude oil, almost all commodities. Also, the underlying fundamentals are still bearish; so we had some commercial pressure."
Fundamentals in the crude oil market remain bearish with a $2 contango in the September-October contracts, pointing to an excess in supply. Nonetheless, the price of crude traded up toward the end of the day, buoyed by trading in the gasoline market.
"Interesting that we had both sides bearish early," said Newsom. "Commercial buying came back in late when the non-commercial buying seemed to die out and helped to trim the losses. Most of the support continues to come from the gasoline market."
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