Commodity Corner: Oil Down, NG Up for the Week
Crude oil settled at $81.51 a barrel Friday, a 34-cent decline from the previous day, as traders responded to action taken by the Chinese government to address rising inflation.
China's government, which many thought would raise interest rates to quell inflation, decided to take a somewhat milder approach Friday: increasing the required reserve replacement ratio for banks. Although less dramatic than the former approach, the move is expected to have a dampening effect on demand for oil and other commodities.
Also on the minds of traders was pending action by the Irish government, which faces a serious debt crisis brought on by a real estate bust. Ireland's prime minister on Friday confirmed the government was holding talks with the EU and the International Monetary Fund to craft a bank bailout plan to help stabilize the country's banks. The increasing likelihood of an Irish bank bailout has helped the euro to regain strength against the dollar recently. However, a weaker dollar was not enough to carry oil into positive territory for Friday.
December crude traded within a range from $80.59 to $82.75 Friday. Beginning with Monday's settlement price of $84.86, oil is down 3.9 percent for the week.
For natural gas, the story has been quite different. December gas futures surged 8.2 percent during the week, thanks to colder weather conditions taking hold in much of the country and forecast to continue through the Thanksgiving holiday.
Natural gas gained 15 cents Friday to settle at $4.16 per thousand cubic feet. It peaked at $4.17 and bottomed out at $3.975.
Gasoline for December delivery fell three cents to settle at $2.20 a gallon Friday. The futures price fluctuated from $2.16 to $2.25. Gasoline is virtually flat for the week, having risen only 0.2 percent since Monday.