Crude Oil Retreats After Initial Gains

Crude oil dropped today amid skepticism about the rescue package for Spain. At first, news that the indebted nation would receive a bailout improved market sentiment and pushed commodities to upside. The optimism was short-lived, though, and prices soon tumbled. Traders are concerned that the announcement of an aid is just a distraction to ease tensions on markets ahead of the Greek elections this month.

Additionally, crude weakened on speculations that Saudi Arabia may continue to bolster oil production. The second biggest oil producer in the Organization of the Petroleum Exporting Countries may pump more oil as an effort to support the global economy by reducing fuel prices. At the same time, Iran and Venezuela criticize those OPEC countries whose output is above quotes. OPEC members will meet on June 14 to discuss the ceiling for oil production.

July futures for delivery of crude oil fell as much as $1.40 to $82.70 per barrel on NYMEX, the lowest price since October 6, following the earlier jump to $2.54 (3 percent). Brent dropped from $100.90 to $96.50 as of 21:35 GMT today on ICE after it climbed as high as $102.21 earlier.

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