Lifted primarily by the greenback's drop to a new 15-month low against a basket of currencies, crude oil futures rose above $77 on the New York Mercantile Exchange on Wednesday, despite U.S. government data underscoring another build in crude stockpiles.
Ahead of the Thanksgiving holiday, the price of light, sweet crude oil for January delivery settled at $77.95 on the NYMEX, a 2.5% gain on top of yesterday's final price tag.
Fresh developments in the U.S. economic recovery incited positive sentiments in the market today. Specifically, the number of U.S. workers filing weekly jobless claims fell to its lowest level in more than a year, and a greater-than-expected rise in personal consumption for October encouraged investors to boost purchasing in commodity markets.
"What a turnaround on oil today," commented Phil Flynn, vice president in charge of research for PFG Best in Chicago. "The $75-low today is an area that was the old resistance point for oil for many months, and now it turned out to be a great support."
Flynn continued, "I think what really turned the market around was a combination of good economic data along with continuing weakness in the dollar, and what really led the market once again was the gold market. Gold hit a record high, and was up eight days in a row, which has encouraged buyers to also purchase oil."
The analyst noted that from a trading standpoint, the market is establishing a well-defined range, as evidenced by today's session, which is providing good parameters, off of which market participants can trade.
Inventories In Line With Expectations
Oil prices remain strong in the face of still-bearishly high inventories accumulated over months of tepid demand for crude products. Today, the U.S. Energy Information Administration issued its weekly inventory report close to analysts' expectations, with crude oil stockpiles rising by one million barrels to 337.8 million in the week to Nov. 20. Furthermore, distillate stocks fell by 500,000 barrels to 166.9 million barrels, while gasoline supplies also rose one million barrels to 210.1 million barrels.
Notably, the refinery utilization rate was boosted by a 0.9 percentage point to 80.3 percent of capacity.
Natural Gas Market Explodes During Light-Volume Trading
Additionally, natural gas futures for December delivery skyrocketed past a $5-threshold ahead of the holiday, supported by a lower injection into natural gas supplies, or a build of 2 billion cubic feet, rather than an anticipated 5 bcf increase, according to the EIA.
"Today, natural gas got above $5, and I think three major factors drove the higher price today," said Flynn. "We are going to get a winter after all, better economic data helped this market rally early on and the smaller-than-expected injection into supply was really the catalyst that broke the market even higher."
"Now, I honestly believe that it would have been unlikely that natural gas would have rallied as much as it did if it weren't for the fact that it was a holiday weekend," Flynn added. "I think the light volume probably exasperated the move a little bit, so I don't know if I believe that this market is going to hold above $5 -- the weather's going to have to live up to expectations this winter, or this pop up above $5 is going to be very short-lived," the analyst contended.
Most Popular Articles
From the Career Center
Jobs that may interest you