Oil Closes at Fresh Two-Month High on Weather, Strong Indicators
Crude oil futures reversed morning declines and closed Thursday's session at a fresh two-month high on colder weather forecasts and improving economic data.
The commodity, which has generally traded in a tight $85-to-$90 range since mid-October, settled at $90.13 a barrel in futures for February delivery on the New York Mercantile Exchange, up 0.2% on the day. That's the highest settlement price since Oct. 18 and marks the fifth straight rise.
Brent oil futures lost 16 cents a barrel to settle at $110.20 a barrel.
Market participants said crude garnered some support from forecasts for significantly colder weather, projections that also boosted heating oil futures. Heating oil futures settled at $3.058 a gallon, up 2.2 cents, or 0.7%.
The National Weather Service warned of a "powerful" storm in the Midwest that would bring "widespread impacts in the form of blizzard conditions, severe thunderstorms, damaging winds and fire weather conditions to the central U.S." An agency map pointed to possible heavy snow in parts of the Appalachian region.
"Certainly, weather is a driving force," said Andy Lebow, senior vice president for energy futures at Jefferies Bache.
Analysts said crude also got support from U.S. economic indicators that beat expectations. Third-quarter gross domestic product growth, which was forecast at 2.8%, came in at 3.1%.
Existing-home sales increased 5.9% from a month earlier to a seasonally adjusted annual rate of 5.04 million in November, the National Association of Realtors said Thursday. It was the strongest month since November 2009. That bested analyst expectations for sales to rise by 2.3%.
Initial jobless claims--a measure of layoffs--increased by 17,000 to a seasonally adjusted 361,000 in the week ended Dec. 15, the Labor Department said Thursday. That matched analyst expectations.
Oil's close was off an intraday high of $90.54 and its gain was less than Wednesday's 1.8% rise. One reason was the lack of progress in Washington on negotiations over the so-called fiscal cliff. A deal to avoid such scheduled tax increases and spending cuts could boost oil prices to $91, said Fred Rigolini, vice president at oil-options brokerage Paramount Options.
"We're not seeing anything real concrete today," Mr. Rigolini said. "There's nothing to really fuel the rally anymore."
The lingering uncertainty over the fiscal cliff could also temper oil's seasonal rally that normally takes place between late January and late April ahead of the summer driving season, said Walter Zimmermann, a vice president at brokerage United ICAP.
"The big question is: How much will politics intrude into the normal seasonality of WTI," Mr. Zimmermann said.
Gasoline futures settled at $2.754 a gallon, up 1.1 cents.
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.