Crude Posts Modest Rise for Week
NEW YORK--Crude-oil futures rose Friday, moving prices into positive territory for the week as traders were more hopeful that the U.S. fiscal cliff could be averted.
Light, sweet crude for January delivery settled 84 cents, or 1%, higher at $88.91 a barrel on the New York Mercantile Exchange. ICE Brent crude rose 34 cents to $111.10 a barrel.
The gains Friday followed a 1.8% rise Thursday and sent prices 0.7% higher for the week. Encouraging comments during most of the week from U.S. government officials has led to some cautious optimism that a budget deal can be reached before the end of the year, when a series of severe budget and tax cuts will automatically go into effect.
Several economists have warned the measures are so draconian that they would push the U.S. economy into a recession, hurting oil demand.
"With today's strength and yesterday's rally, traders are ultimately optimistic," said Peter Donovan, vice president at Vantage Trading. The market has been pricing in "that a deal is going to be reached," he added.
Crude-oil has held in a trading range between $85 and $90 for most of November as investors balanced concerns of a weakening global economy and difficult budget talks against signs of economic improvement in the U.S.
"Oil is subject to the same dynamics as all the other markets, kind of a sideways movement right now," said Jason Schenker, head of Prestige Economics. "The story hasn't changed. It's a story of modest growth and gradually improving economic conditions at home and abroad.
The Chicago Business Barometer, a survey of Illinois, Indiana and Michigan purchasing managers, moved to a reading of 50.4 for November, up from October's 49.9. Any reading above 50 indicates an expansion in manufacturing activity.
Meanwhile, U.S. consumer spending fell 0.2% last month, the first decline since May, the Commerce Department reported.
A growing economy will spark increased demand for raw materials, such as crude oil.
Front-month December reformulated gasoline blendstock, or RBOB, settled 2.56 cents, or 0.9%, lower at $2.7614 a gallon. December heating oil settled 0.07 cent higher at $3.0413 a gallon.
Both contracts expired at settlement Friday.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.