Nymex Crude Oil Edges Higher on Euro Hopes
NEW YORK - Crude-oil futures edged upward Friday despite mediocre U.S. financial indicators after the euro zone garnered its latest vote of confidence from key European political leaders.
Front-month crude-oil futures at the New York Mercantile Exchange settled at $90.13 a barrel, up 74 cents, or 0.8%. Front-month Brent futures settled at $106.47 a barrel, up $1.21.
Friday marked the fourth-straight day that oil prices have risen. Since Monday, oil prices have jumped 2.2%.
Oil and other investments received an upward bump Friday after German Chancellor Angela Merkel signaled strong support for the euro. As Germany's leader, Ms. Merkel has been considered especially important to the euro's prospects, given Germany's strong financial position.
Ms. Merkel and French President Francois Hollande pledged Friday to do their utmost to protect the euro zone and said they were deeply committed to the integrity of the currency bloc.
"Germany and France are deeply committed to the integrity of the euro zone. They are determined to do everything in order to protect the euro zone," the leaders said in a joint statement, published after the two spoke by telephone.
The statement comes on the heels of remarks Thursday by European Central Bank President Mario Draghi, who called the euro "irreversible."
Ms. Merkel's comments Friday gave Mr. Draghi's remarks "a little more credibility," said energy analyst Dominick Chirichella of the Energy Management Institute, an education and analysis company.
Friday's rise in oil came despite the latest in a series of mediocre U.S. financial data that point to continued slow growth.
U.S. gross domestic product rose 1.5% between April and June, above the 1.3% forecast by economists surveyed by Dow Jones Newswires, but well below sequential GDP growth. The 1.5% rate is down from the upwardly revised 2.0% growth rate during the prior three months and a 4.1% rate in the fourth quarter of 2011.
Personal-consumption expenditures rose only 1.5% during the quarter, the smallest gain in a year and down from a 2.4% increase in the first quarter. Spending on durable goods--items such as cars and home appliances meant to last at least three years--fell 1.0% in the second quarter.
New data Friday also pointed to fairly weak U.S. consumer sentiment. The Thomson Reuters/University of Michigan consumer-sentiment index edged up to 72.3 at the end of July versus a reading of 72.0 early in July and was down from a final June level of 73.2, according to an economist who had seen the report. Economists surveyed by Dow Jones Newswires had expected the end-July index to stay at 72.0.
Mr. Chirichella said the jump in oil prices follows speculation that the Federal Reserve and other central banks could undertake additional economic stimulus. Oil isn't going higher because of supply-and-demand fundamentals, he said.
"Markets are trading around the perception of a lot more money being pumped into the economy," Mr. Chirichella said. "The market response we're getting is not really based on any fundamentals."
Citi Futures analyst Tim Evans pointed to data that show that U.S. oil production has jumped more than 13% since a year ago, even as demand has remained weak.
"The market is well supplied," he said. "Without a significant geopolitical event that disrupts supply, the upside for prices is limited."
Front-month reformulated gasoline blendstock, or RBOB, settled at $2.888 a gallon, up 7.4 cents. Front-month heating oil settled at $2.890 a gallon, up 2.1 cents.
Copyright (c) 2013 Dow Jones & Company, Inc.
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