Crude Oil Pares Losses On Europe Market Gains

Crude-oil prices eased in electronic trading Tuesday, but pared earlier losses as the Spanish government managed to sell more than expected at a debt auction and markets across Europe generally pushed higher.

Light, sweet crude-oil futures for delivery in July CLN2 -0.16% dropped 10 cents, or 0.1%, to $83.16 a barrel on Globex, after finishing 76 cents lower in a regular session on the New York Mercantile Exchange Monday.

The losses overnight came as yields on 10-year Spanish sovereign bonds jumped over 7%, raising fears that the high costs may shut the government out of credit markets. Yields on Italian 10-year bonds also jumped over 6%, helping to dissipate the relief that followed the results of the weekend Greek elections.

The yield on Spain’s 10-year bond ES:10YR_ESP -1.46% backed off the prior day’s highs, but remained above 7% Tuesday.

“In our view, prices could also weaken further if [the] Organization of Petroleum Exporting Countries is slow to rein in excess production,” Tim Evans, an energy analyst at Citi Futures Perspective told Market Watch.

“Our base case scenario has the global supply/demand balance returning to a closer balance over the second-half of the year on a combination of stronger seasonal demand and moderating OPEC output,” he added.

Most Asian markets declined on Tuesday, following a weak finish for the Dow Jones industrials overnight on Wall Street. 

U.S. equity futures pointed to a higher start for Wall Street Tuesday, with Dow Jones Industrial Average DJIA -0.20% futures up 23 points, or 0.2%, to 12,709, while S&P 500 Index SPX +0.14% futures rose 2.6 points, or 0.2%, to 1,343.50.

European shares also moved higher as pressure on Spanish bond yields eased after the government paid higher yields on a short-dated auction of treasury bills, but raised slightly more than the top of targeted range.

Among other energy products, July futures for gasoline RBN2 -0.44% declined by 0.4% to $2.65 per gallon and heating-oil HON2 -0.16% futures for July delivery were steady at $2.62 per gallon.

Natural-gas futures NGN12 -0.61% for delivery in the same month fell 0.4% to $2.62 per million British thermal units.