INSTANT VIEW: Trade deficit widened as oil price rose

NEW YORK (Reuters) - The U.S. trade deficit widened in June to $27.0 billion, as goods imports increased for the first time in 11 months on the back of higher oil prices, a Commerce Department report said on Wednesday.

KEY POINTS: * Analyst surveyed before the report had expected the monthly trade gap to widen to around $28.5 billion. But stronger foreign demand for U.S. goods and services offset some of the impact of the oil price increase on the deficit. * Both U.S. exports and imports remained sharply below year-ago levels, before the global financial crisis began wreaking a savage toll on international trade. * The trade gap for the first six months of 2009 totaled nearly $173 billion, down more than 50 percent from the same period last year. At the current pace, the U.S. trade deficit for all of 2009 would be the lowest since $265 billion in 1999. * U.S. imports of goods and services rose 2.3 percent in June to $152.8 billion, the highest since January. Higher oil prices accounted for much of increase, and imports of consumer products fell to the lowest since November 2005.

COMMENTS:

IAN LYNGEN, SENIOR GOVERNMENT BOND STRATEGIST, CRT CAPITAL GROUP, STAMFORD, CONNECTICUT:

"The trade balance came in narrower-than-expected at -$27 billion versus -$28.7 billion consensus, that is $33.2 billion narrower year-on-year. Oil was the big contributor to the gains in imports, +19 percent month-on-month.

(The fall in imports of consumer goods is) "suggesting the positive GDP impact of the report is masking the strain on the consumer and near-term growth potential."

DOUG BENDER, MANAGING DIRECTOR, MCQUEEN, BALL & ASSOCIATES, BETHLEHEM, PENNSYLVANIA:

"It's still a huge trade deficit. Going back, you had a real firming in the oil prices in June: that had to account for a fair amount of it."

PETER KENNY, MANAGING DIRECTOR, KNIGHT EQUITY MARKETS, JERSEY CITY, NEW JERSEY:

"The data shows that the dollar is strong and exports are climbing which is very good for the market and for the economy, a trend that we want to see more of. But it's not enough to have a significant impact on the market to push up or down. It's just an icing on the cake that investors have been expecting."

STEVE GOLDMAN, MARKET STRATEGIST, WEEDEN & CO, GREENWICH, CONNECTICUT:

"It was a bit better than expected in terms of the deficit, but unlike 1987 its not the market-moving number it once was. Investors are trying to catch their breath over from the run we've seen over the past month and a half. Stocks have been reaching some short-term objectives and some would consider the market overbought. This is a market that should find some support on modest declines."

MARKET REACTION: STOCKS: U.S. stock index futures point to flat open BONDS: U.S. Treasury debt prices hold gains DOLLAR: U.S. dollar steady and near flat levels versus euro, yen