Crude oil prices climbed to 11-month highs on the New York Mercantile Exchange and then fell hard into the red just before the close.
September crude oil was down $1 at $74.80 a barrel late in the session. Reformulated gasoline edged 2 cents lower to $2.08 a gallon. Heating oil slipped 3 cents to $2.03 a gallon.
Natural gas was up 3 cents at $5.96 per million British thermal units.
Crude futures jumped above $77 a barrel in overnight trading, topping out at $77.24 before the session opened at the Nymex. After traversing near its highs for most of the day, crude futures suddenly dropped nearly $2 in the early afternoon.
"Lots of traders were planning on shorting crude at the $77 mark," said Larry Levin, technical analyst at Secrets of Traders. "A lot of shorts were triggered when crude reached its highs today."
Once the short traders have their chance to exit the market, crude's ramp upwards in price will likely start up again, Levin said. "I will be surprised if we don't see $80 oil next week."
A bearish malaise also plagued equities. The
CBOE Oil Index
fell 4.3% to 758.57.
dropped 4% to $80.63, and
was 3.7% lower at $87.62. Chevron will report its second-quarter earnings on Friday.
reported that its income in the second-quarter fell nearly 1% from the same period a year ago. The company blamed weakness in its natural gas business. Shares of Exxon were off 5.5% at $87.69.
was downgraded by Bear Stearns to peer perform from outperform, sending its stock down 8% to $61.28.
was upgraded by Lehman Brothers to neutral weight from underweight, lifting shares of the natural gas producer 4.4% to $59.31.