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Crude Oil Searches for Support

The July contract dives $2.05 to $63.15 a barrel.

An easing of political tensions in Nigeria and the failure of a technical support level to hold sent crude prices tumbling 3% on the New York Mercantile Exchange Tuesday.

July light sweet crude plummeted $2.05 to $63.15 a barrel, and other energy futures followed. Reformulated gasoline lost 11 cents to close at $2.29 a gallon, and heating oil fell 7 cents to $1.87 a gallon.

June natural gas dropped 5 cents to $7.59 per million British thermal units. The June natural gas contract expired at the close of the session at the Nymex.

Partly responsible for the selloff was word that Nigerian union leaders ordered oil workers back to their jobs Saturday after winning concessions from the country's national oil company. The workers had been on strike since last Thursday. The quick resolution to the strike weighed heavily on oil prices.

Crude futures began to fall as soon as trading began in the morning session. As prices fell through support levels, crude's downward momentum picked up steam.

"Although the news out of Nigeria was bearish, the collapse in crude prices was not caused by one specific news item," says Tom Bentz, analyst at BNP Paribas Commodity Futures. "The intense selling pressure throughout the day was more technical in nature."


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and Citgo all restarted refinery units over the weekend. However, the news of the restarts failed to provide support to crude prices, since there is currently an abundance of oil inventories in the U.S., Bentz said.

Meanwhile, energy stocks followed crude prices lower. The CBOE Oil Index lost 0.7% to 724.68. ConocoPhillips retreated 1.4% to $75.35, and


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fell 0.5% to $80.71.

Exxon Mobil

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finished 1.1% lower at $82.62.



announced that it's selling its power plant in Channelview, Texas, to EnergyCo for $470 million in cash, and its shares slipped 8 cents to $9.60.

Elsewhere, E&P firm

Forest Oil


said it will sell its entire Alaskan portfolio to Pacific Energy Resources, including 1 million undeveloped acres and its interests in the Cook Inlet Pipeline Company. The deal is worth $464 million in cash and stock for Forest.

Shares of Forest eased 4 cents to $40.01.

Pogo Producing


said Monday that it's selling its Northrock Resources subsidiary to the Abu Dhabi National Energy Company for $2 billion in cash. The sale includes Canadian properties with 29,000 barrels of oil per day of production and estimated proven reserves of roughly 706 billion cubic feet equivalent.

Shares of Pogo rose 2.4% to $53.30.