July 6, 2010 / 4:56 AM / in 7 years

UPDATE 7-Oil slips back as equities pare gains

* Oil slips after early gains, hit by equities pullback

* Weaker U.S. dollar helped boost oil early

* Coming up: API oil data 4:30 p.m. EDT Wednesday (Updates to close, adds details, background)

By Brian Ellsworth

NEW YORK, July 6 (Reuters) - U.S. oil prices fell for a sixth straight session on Tuesday, ending near a one-month low hit overnight, before a bounce tied to a stock market recovery, as the crude and equity markets gyrated in lock-step.

“The S&P 500 fell back from its highs and that caused crude to pull back and sell stops were triggered below $73 a barrel,” said Robert Yawger, senior vice president, energy futures at MF Global in New York

U.S. crude for August delivery CLc1 fell 16 cents, or 0.22 percent, to close at $71.98 a barrel. It retreated from a $73.86 intraday peak, having earlier touched $71.09, the lowest price since June 8.

That decline came despite a decline in the dollar against a basket of currencies, which usually boosts crude by making prices for buyers using other denominations more attractive.

ICE Brent crude for August LCOc1 fell 2 cents to $71.45 a barrel.

Global stocks retraced earlier gains but still closed up in the session, bouncing from six- and seven-week lows. [MKTS/GLOB]

MSCI’s all-country world stock index .MIWD00000PUS rose 1.4 percent.

“(It‘s) a relatively weak performance on the part of crude oil and it does point to weak underlying fundamentals,” said Tim Evans, energy analyst for Citi Futures Perspective.

“Some of the data we’ve seen in terms of unemployment and consumer sentiment is making us question how strong the consumer is.”

The Dow Jones industrial average .DJI also reversed midday gains, only to steady, up 0.08 percent, in late trade.

U.S. markets reopened on Tuesday after an Independence Day holiday and stocks rose broadly following five days of losses. [.N] Stocks were lifted by a report showing the services sector grew for the sixth month in a row in June and on signs of strength in Europe’s banking system supported U.S. equities.

But the rate of growth in the U.S. non-manufacturing sector slowed more than expected and hit its lowest since February, according to the report from the Institute for Supply Management. [ID:nN06274234]

TRYING TO REBOUND FROM SWOON

Oil prices attempted to rebound on Tuesday after weak U.S. employment numbers and disappointing manufacturing data from the United States and China helped knock oil prices down 8.5 percent the previous week.

“While we’ve seen prices bounce from the recent lows, the move back up is still treacherous as there is still no clear sign yet that the bottom in the current market has been reached,” said Phil Flynn, analyst at PFGBest Research in Chicago. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Poll: Outlook for global supply and demand [ID:nLDE6641UN]

Reuters Insider: link.reuters.com/vud95m

Graphic: performance across commodity markets

link.reuters.com/hun72k <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

After Hurricane Alex swept into Mexico last week, oil traders on Tuesday eyed a low pressure system that the U.S. National Hurricane Center said had a 30 percent chance of developing into a tropical depression as it moves northwest toward Mexico’s Yucatan peninsula. [ID:nN05162573]

The weekly oil inventory report from the American Petroleum Institute will be delayed to Wednesday due to Monday’s U.S. holiday and government statistics from the Energy Information Administration will be published on Thursday. (Additional reporting by Gene Ramos and Robert Gibbons in New York, Emma Farge in London and Alejandro Barbajosa in Singapore; Editing by Alden Bentley)

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