Oil rally stalls; prices hover around $68
SIOUX FALLS, S.D. -- Oil prices fell Monday as a four-month rally that has roughly doubled the price of crude lost some steam alongside the stock markets.
Benchmark crude for July delivery fell 38 cents to $68.06 a barrel on the New York Mercantile Exchange. Prices dropped as low as $66.78 before a rush of trades pared early losses.
Crude prices have risen in tandem with stocks as gloom about the global economy eases. Oil briefly broke the $70 threshold Friday after the U.S. Labor Department reported that employers cut 345,000 jobs in May, the fewest since September.
Still, the unemployment rate hit 9.4 percent in May, a 25-year high and few people believe that there is enough demand to justify the soaring price of crude.
The growing sentiment is that the run-up in oil is a bubble ready to pop. Higher prices and momentum have become the justification for prices to move higher still, said analyst and trader Stephen Schork.
"The only trick is, will it pop at $75, $147 or $200?" asked Schork in his daily report. "We don't know, but we do know it will pop."
That is not to say that prices for crude, and gasoline, will not rebound strongly in the future, a point reiterated by Royal Dutch Shell Chief Executive Jeroen van der Veer on Monday. The Shell executive warned that the oil and gas industry will have trouble meeting demand once the global economy recovers, which could lead to the next price spike.
Retail gasoline prices have been on a tear, but remain far below last year at this time when a gallon broke the $4 barrier.
On Monday the average national retail price for a gallon of gas rose less than a penny to $2.619, according to auto club AAA, Wright Express and Oil Price Information Service. That's more than a dime higher than last week.
In other Nymex trading, gasoline for July delivery was essentially flat at $1.945, while heating oil gained less than a penny to $1.7716. Natural gas for July delivery fell 14.9 cents at $3.719 per 1,000 cubic feet
In London, Brent prices rose 8 cents to $68.42 a barrel on the ICE Futures exchange.