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Crude oil futures ease off 14-month high; Egypt unrest limits losses

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Shutterstock photo - Crude oil futures eased down modestly on Thursday, retreating from the highest level since May 2012 as the U.S. dollar strengthened against its major counterparts in wake of policy decisions by the European Central Bank and the Bank of England.

On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded at USD101.09 a barrel during European morning trade, down 0.1% on the day.

New York-traded oil prices held in a range between USD100.71 a barrel, the daily low and a session high of USD101.48.

Trade volumes were expected to remain light on Thursday, with markets in the U.S. closed for the Independence Day holiday.

The euro tumbled to a five-week low against the U.S. dollar after ECB President Mario Draghi said the central bank expects to maintain interest rates at the current or lower levels for an "extended" period of time.

Speaking at the bank's post policy meeting press conference, Draghi said the decision to give forward guidance on interest rates was taken unanimously by policymakers and was "a very significant step forward" for the ECB.

Draghi said risks to growth in the euro zone remain "on the downside" and added that monetary policy will remain accommodative for as long as is necessary.

The comments came after the ECB left interest rates on hold at record lows of 0.5%.

Meanwhile, the pound also dropped to a five-week low against the greenback after the Bank of England left monetary policy unchanged but struck a dovish tone in its rate statement.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.8% to trade at 84.06, the strongest level since May 29.

Dollar-denominated oil futures contracts tend to weaken when the dollar gains, as this makes oil more expensive for buyers in other currencies.

Losses were limited as market players continued to monitor political turmoil in Egypt.

Oil prices rallied to USD102.15 a barrel on Wednesday, the strongest level since May 4, 2012, on concerns that political unrest in Egypt would spread to major oil-producing countries in the Middle East.

Egypt swore in Adly Mansour as interim leader earlier in the day after former President Mohammed Morsi was ousted from power on Wednesday in what various media outlets reported as a military coup.

Oil traders now looked ahead to Friday's highly-anticipated U.S. nonfarm payrolls data for indications of how the recovery in the U.S. labor market is progressing.

Any improvement in the U.S. economy was likely to reinforce the view that the Federal Reserve will begin to taper its bond purchase program in the coming months.

The Fed's stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery shed 0.35% to trade at USD105.38 a barrel, with the spread between the Brent and crude contracts standing at USD4.29 a barrel.

The gap between the contracts narrowed to the smallest level since December 2010 earlier in the week, amid an improving production outlook in the North Sea and indications of declining stockpiles at Cushing, Oklahoma, the delivery point for Nymex oil futures. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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