Unable to rally above yesterday's gains, oil prices retreated slightly on the New York Mercantile Exchange after bearish labor statistics spurred investors away from riskier markets Thursday. Additionally, the price of natural gas extended its losses and fell below $5 at the close of today's session.
The price of light, sweet crude oil settled on the NYMEX Thursday at $81.19, or 18 cents lower than yesterday's record closing price.
"I don't think the market retreated too much today," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut. "As you can see by the level we reached at the end of the day, the market has climbed to one-year highs," he noted.
Despite a drop in mere cents from the highest settle of the year recorded on Wednesday, the price per barrel of crude oil remains above $81, having risen to its strongest levels for 2009. Some analysts still believe oil prices could potentially break through $90 to $100 by year's end on continued bullish sentiments and a further weakening of the greenback.
Market Holds to Bullish Sentiment
Crude prices came under pressure today as Asian equities lowered, the dollar recovered against other major currencies and U.S. jobless claims were reported to have increased by 11,000 last week, McGillian pointed out.
"Once it looked as if the equities market, which crude prices have been tied to pretty steadily now for the last few months, turned and ran toward its highs for the day, oil prices basically rebounded right alongside it. So, the trend continues to drive the market's trading patterns, and that is rising equity prices and a weaker dollar support a higher oil price," McGillian said.
The analyst continued, "We have begun to hear drum beats that if oil prices continues to rise and global economic growth continues to improve, then OPEC will consider raising output in December.
"The market seems to have absorbed that [news] without too much of a problem, so I think this shows that the market still has a bullish sentiment to it, and we probably have further levels to go in front of us," McGillian contended on whether oil prices have room to rise.
Gas Market Buried by Record Storage
Slipping below its record price of more than $5, the price of natural gas lowered to $4.947 per thousand cubic feet on the NYMEX Thursday.
"Even though the weekly EIA storage report was a little less than what people expected, the fact is we've reached a new record in total storage levels for four consecutive weeks," McGillian said.
"The gas market looks as if it will have near-capacity storage levels as we go into the winter withdrawal season, and you have slightly moderating weather forecasts affecting market prices," he concluded.
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