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Crude Gains, Following Equities Higher

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U.S. crude futures settled higher Friday in light post-Thanksgiving trading, helped by rising stock markets and a falling U.S. dollar.

Light, sweet crude for January delivery rose 90 cents, or 1%, to settle at $88.28 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange for January delivery closed 83 cents higher at $111.38 a barrel.

Nymex energy markets closed one hour early Friday, at 1:30 p.m. EST, following the Thanksgiving holiday. Trading volume was on pace to end at the lowest level this year, with less than 150,000 contracts changing hands as of 2:00 EST. Average trading volume over the past 200 days was roughly 559,000.

"It's extroardinarily quiet...people are probably watching the clock closer than the market," said Andy Lebow, a broker and oil trader at Jefferies Bache, noting that oil looked to be following other markets Friday. "The path of least resistance is higher."

Oil prices received a boost from a rise in equities, which traders often use as a gauge of broader economic growth and future oil demand. The Dow Jones Industrial Average advanced 173 points, or 1.4%, to 13,009, helped by improving data on Chinese manufacturing and a better-than-expected report on business confidence in Germany. Retail stocks posted some gains as shoppers headed out for Black Friday sales.

Additionally, the dollar fell against a basket of other currencies. A weaker dollar is typically bullish for dollar-denominated oil futures, as crude is cheaper for buyers using other currencies.

Over the past two weeks, oil markets have wavered between gains and losses as traders weighed the latest Middle East conflict against slumping global economic growth and rising oil inventories.

The conflict between Israel and Hamas in Gaza has paused amid a negotiated ceasefire, calming fears that rocket attacks could lead to a regional war with other nations, such as Egypt, which could impact energy-supply routes.

Meanwhile, European Union leaders ended the second day of budget talks Friday without an agreement on the bloc's budget amid divisive negotiations.

The 27-nation bloc remains deeply divided on spending and other issues, and oil markets are concerned that discord could further crimp the EU's economic outlook.

U.S. crude-oil futures are down from recent highs of $99 a barrel in mid-September.

Front-month December reformulated gasoline blendstock, or RBOB, settled 0.2% lower at $2.7439 a gallon. December heating oil ended 0.2% higher at $3.0771 a gallon. 

Copyright (c) 2012 Dow Jones & Company, Inc.


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