English Lessons

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Oil prices fell on Friday as Europe's debt problems helped the dollar index rebound, extending losses into a second day after consuming nations announced they were tapping strategic reserves.

Photo: CNBC.com IEA Oil Reserves

Brent's premium to U.S. light sweet crude benchmark West Texas Intermediate fell below $15 a barrel, dropping from above $19 on Wednesday. The premium has contracted from its record $23.34 reached on June 15.

The euro fell versus the dollar as investors worried that Greece's parliament may not pass austerity measures needed for the country to secure more bailout funds.

"The strengthening of the dollar index is helping pressure oil and we're seeing an unwinding of the Brent-WTI spread because of the release of the strategic reserves," said Phil Flynn, analyst at PFGBest Research in Chicago.

"The Brent-WTI spread coming in indicates that the release was justified," he added.

In London, Brent crude [LCOCV1  105.23    -2.03  (-1.89%)   ] for August last fell $1.89 to trade at about $105.37 a barrel, having pulled back from an earlier rebound to $108.70 after the previous session's slide.

U.S. light, sweet crude [CLCV1  91.11    0.09  (+0.1%)   ] for August delivery last fell 35 cents to trade near $90.67 a barrel, also seeing choppy trading on Friday.

The IEA move came after the Organization of the Petroleum Exporting Countries last month could not reach agreement on a boost to production targets. But Saudi Arabia had pledged to increase output to meet demand.

"Saudi Arabia will be crucial — will it stick to its promise to increase its output to 10 million barrels a day or not?" said Carsten Fritsch, an analyst at Commerzbank in Frankfurt.

"If they don't, then the IEA decision will have backfired. Maybe they will scale back production in July after this stock release."

Better-than-expected U.S. durable goods data provided a brief lift to U.S. crude futures but concerns about euro zone debt problems continued to weigh on markets.

New orders for U.S. manufactured goods in May increased 1.9 percent after dropping 2.7 percent in April, the Commerce Department said.

But concerns about euro zone debt problems continued to weigh on markets. The S&P fell about 1 percent as worries about the Italian banking sector added to the uncertainty over the passage of a Greek austerity plan. 

Oil prices fell on Friday as Europe's debt problems helped the dollar index rebound, extending losses into a second day after consuming nations announced they were tapping strategic reserves?

A. TRUE
B. FALSE

But concerns about euro zone debt problems continued to weigh on markets?

A. TRUE
B. FALSE