Commodity Corner: Oil Falls on Chinese Interest Rates
Crude futures pulled back Monday, ending a five-day rally on China's decision to increase key interest rates.
Although China's move to raise its benchmark deposit and lending rate was anticipated, analysts predict it to be the cause for Monday's decline in oil prices. By increasing interest rates, Chinese authorities hope to control rising prices; however, analysts fear it'll also decrease the country's demand for oil. After the U.S., China ranks as the second-largest oil consumer in the world.
Crude fell 51 cents Monday, settling at $91 a barrel. On the first trading-day after the Christmas holiday, oil prices fluctuated between $90.51 and $91.88 a barrel.
Meanwhile, natural gas gained 2.9 cents Monday, as January options expired and harsh winter weather increased demand. Due to the blizzard in northeast U.S., the New York Exchange delayed opening floor trading by two hours. The blizzard also caused major airports in New York City to remain closed. According to the National Weather Service, the snow storm is the heaviest December snowfall in six decades.
Front-month natural gas settled at $4.11 per thousand cubic feet on the New York Mercantile Exchange. The intraday range for natural gas was $3.99 to $4.12.
Reformulated gasoline blendstock, RBOB, declined 2.17 cents, settling at $2.42 a gallon. Gasoline traded between $2.41 and $2.45 Monday.