Crude-Oil Prices Retreat After Spanish Debt Downgrade
Crude-oil prices fell, as the dollar strengthened following a credit rater's downgrade of Spain's sovereign debt.</br></br>In early afternoon trading in New York, the price of the light, sweet crude-oil futures contract for July delivery dropped 84 cents or 1.1% to $73.71 a barrel on the New York Mercantile Exchange as news broke that Fitch Ratings downgraded Spain's debt rating to AA+ from AAA. North Sea Brent crude on London's ICE futures exchange shed 88 cents, or 1.2%, to $73.82.</br></br>The euro weakened to $1.2324 against the dollar from $1.2370 before the Fitch downgrade was announced. A stronger dollar puts pressure on oil prices, as it makes oil more expensive for holders of other currencies and could thus crimp demand.</br></br>Oil's decline demonstrates how the energy markets remain sensitive to swings in the currency markets caused by Europe's debt problems. Signs of stabilization in Europe and strong economic data from the U.S. and China helped crude stage a strong recovery this week from a sell-off that had brought prices to as low as $64.24 a barrel.</br></br>On Thursday, oil prices posted the strongest advance of the year, rising $3.04 a barrel, or 4.3%, as Spain agreed to budget cuts and China reiterated its commitment to European bond investments. Stock markets and other commodities posted sharp price increases as investors regained an appetite for risk following a three-week sell-off sparked by concerns over Europe's debt situation and the pace of economic recovery in the U.S. and China. Those fears were lessened this week as economic data showed continued recovery in the U.S. and strong growth from China.