U.S. crude oil futures fell below $76 per barrel today, consolidating after a week of gains and ahead of quarterly U.S. company earnings and key macro-economic data.
Standard & Poor's 500(S&P 500) index earnings are expected to have risen more than 25 percent in the second quarter but the outlook for consumer demand is less bright. US retail sales figures on Wednesday are expected to show spending easing in June.
The dollar rose against a basket of currencies as gold slipped. A firmer dollar often depresses commodities as it makes them more expensive for holders of other currencies.
Crude for August delivery fell 60 cents to $75.49 a barrel by 1333 GMT, after closing last week with a gain of more than 5 percent, its biggest weekly jump since May. Brent crude was trading 55 cents lower at $74.87 a barrel. "Last week was very strong," said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt. "Chinese data was very supportive but there is caution ahead of this week's data and results."
Oil rose early on Monday following Chinese figures showing a 43.9 percent surge in exports in June from a year earlier, while crude imports in the world's second-largest energy user rose by a quarter to hit a record high above 22 million tonnes.At $75 per barrel, oil prices are in the middle of a range identified by both oil producers and consumers as comfortable: high enough to encourage investment and exploration but not so high as to bring rampant inflation or damage economic growth.
The market is also almost at the average closing price over the last year, now around $75.50. U.S. crude is well below a 19-month peak above $87 reached in early May but has rebounded sharply from below $65 on May 20.
Implied volatility for U.S. crude has fallen to around 31 percent after hitting a peak above 45 percent in May.
Investors have unwound long positions in the past couple of weeks, implying less confidence with the economic outlook.
Net speculative long positions on NYMEX crude were cut by nearly 20,000 to 74,216 in the week to July 6, data from the Commodity Futures Trading Commission on Friday showed, the third week of falls.Quarterly U.S. company results will be followed closely this week. David Hufton, head of oil brokers PVM, said the oil market was "caught in the slipstream of the stock markets".
"The stock markets reflect economic sentiment and without specific events to take oil prices in a different direction they simply tuck in behind the stock market peloton," Hufton said.
"Earnings announcements begin today and if they are as good as some believe they could be, we can expect a bullish week for oil and stocks. It may all, however, turn out to be a short-term reprieve. Whilst short-term economic sentiment may be positive, concerns about the future are not going away," he said.
U.S. June retail sales data out on Wednesday will be a key gauge to the country's economic recovery, said Stephen Schork, president of energy advisory firm the Schork Group.
"If we are to see serious gains from the bulls this week, we will need to see strength in equities, strong retail sales figures and a weaker dollar would not hurt," he said in a note.