OIL FUTURES: Crude Rises; Buoyed By U.S. Economic Indicators
11/02/2009 02:55PM
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NEW YORK (Dow Jones)--Crude-oil futures rose Monday to more than $78 a barrel, buoyed by positive U.S. economic indicators, although concerns over the sustainability of the economic recovery lingered.
Light, sweet crude oil for December delivery settled $1.13, or 1.5%, higher at $78.13 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange closed $1.35, or 1.8% higher, at $76.55 a barrel.
U.S. manufacturing and housing data reported early Monday exceeded analyst expectations, re-igniting some of the economic optimism that had evaporated at the end of last week, causing a 3.7% fall in oil prices.
The Institute for Supply Management's manufacturing index--a gauge of the health of the manufacturing sector--jumped to 55.7 in October from 52.6 in September and 52.9 in August.
Confidence in the housing sector came from the National Association of Realtors' index for pending sales of previously owned homes, which rose 6.1% to 110.1 in September from 103.8 in August, the eighth consecutive increase.
Meanwhile, a Commerce Department report showed construction spending in the U.S. unexpectedly surged in September, partly because of strength in housing, rising 0.8% from the previous month.
But there still appeared some nervousness over the sustainability of the U.S. recovery, with the housing gains seen spurred by a tax credit to first-time home buyers that is due to end during the fourth quarter.
These concerns deflated the rise in equity markets and oil prices briefly followed stocks down during the session, touching an intraday low of $76.56 a barrel, the lowest level since October 15.
Oil prices also took their lead from gyrations of the dollar. While the dollar weakened sharply against the euro, it did attempt to strengthen and claw back some of its earlier losses, helping to pare the gains in oil prices.
Oil typically rises if the dollar weakens, as it makes the commodity cheaper to other currency holders.
"Those two components (equities and the dollar) changed and oil went with it," said Peter Donovan of Vantage Trading in New York. "A dollar move in our market is now commonplace."
The financial sector looks likely to set the pace for oil prices again this week, with the focus of oil market participants to be on the U.S. Federal Reserve meeting Wednesday.
"I think the [oil] market's going to be cautious going into the Fed meeting this week," said Phil Flynn, analyst with PFG Best in Chicago. Any signals from the government that it intends to end its fiscal-stimulus efforts could cap the economic recovery and delay any revival in oil demand.
There are still underlying worries over the huge volume of oil stockpiles globally amid continued increases in crude-oil production and tepid oil consumption.
A Dow Jones Newswires survey showed Monday that the Organization of Petroleum Exporting Countries boosted its crude-oil output by an extra 190,000 barrels a day, or 0.7%, in October. This lifted overall production to 26.595 million barrels a day compared with 26.405 million in September.
Front-month December reformulated gasoline blendstock, or RBOB, settled 3.08 cents, or 1.6%, higher to $1.9903 a gallon. November heating oil settled 4.08 cents, or 2%, higher to $2.0460 a gallon.
More information on settlements and highs and lows for futures on Nymex and ICE platforms can be found by searching for the following headlines:
Nymex Light Crude Oil Close
Nymex Harbor RBOB Gasoline Close
Nymex Heating Oil Close
ICE Brent Crude Oil Close
ICE Gas Oil Close
-By Claire Rangel, Dow Jones Newswires; 212-416-2846; claire.rangel@dowjones.com