Oil futures were steady Thursday, hanging on to recent gains with the focus remaining on Washington budget discussions.
Benchmark futures closed above $90 a barrel, retaining most of the gains made Wednesday when prices surged to their highest level in two months on the back of geopolitical tensions and economic news.
Light, sweet crude for February delivery settled 11 cents, or 0.1%, lower at $90.87 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled 27 cents, or 0.2%, lower at $110.80 a barrel.
"I'm impressed the market's hanging in there after yesterday's run," said Andy Lebow, senior vice president of energy futures at Jefferies Bache in New York. Several traders said the market's ability to hang onto the recent gains is a sign that prices may have higher to go.
Settling above $90 a barrel is "positive for the market from a technical standpoint," said Fred Rigolini, vice president at Paramount Options, an oil options brokerage in New York.
Market participants focused on the fiscal cliff negotiations in Washington, where talks to stave off the automatic package of spending cuts and tax increases at the end of this year appear to have stalled.
The Treasury Department also warned that the government would hit its legal borrowing limit by Monday without further Congressional approval.
Oil traders--along with participants in most markets--have been following negotiations in recent weeks, amid concern that failure to reach a deal could have adverse effects on the economic recovery and ultimately dent oil demand.
On Wednesday, however, prices rallied largely on geopolitical concerns. Futures shot 2.7% higher after reports of arrests in the United Arab Emirates over alleged terrorist plots. Meanwhile, Iran resumed naval exercises near the Strait of Hormuz, a major thoroughfare for the world's seaborne oil.
The rally sent prices climbing to their highest level since Oct. 18. But market participants said thin trading volumes might have accounted for the steep move. "It's deader than a doornail," said Mark Waggoner, president of Excel Futures in Bend, Ore.
Traders will look for additional supply and demand cues later in the week when the Energy Information Administration releases oil inventory data at 11 a.m. ET Friday--two days later than usual due to the holidays.
Analysts surveyed by Dow Jones Newswires say crude-oil inventories declined by 1.9 million barrels, on average, in the week ended Friday.
The American Petroleum Institute, an industry group, said its own survey released late Thursday showed crude stocks last week fell 1.2 million barrels last week. Gasoline stocks rose 2.4 million barrels while distillate stocks rose 2.9 million barrels, according to the group.
Front-month January reformulated gasoline blendstock, or RBOB, settled 0.55 cent, or 0.2%, higher at $2.8213 a gallon. January heating oil settled 2.10 cents, or 0.7%, higher at $3.0723 a gallon.
Copyright (c) 2012 Dow Jones & Company, Inc.
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.
More from this Author
Most Popular Articles
From the Career Center
Jobs that may interest you