In its preample to a low-volume trading week ahead of a major U.S. holiday, crude futures ultimately settled in positive territory on the New York Mercantile Exchange after choppy trading Friday, breaking above $73 on short-covering and tensions between Iran and Iraq.
The price of light, sweet crude oil for Janaury delivery gained a percentage point from yesterday's final price tag, rising to $73.36 a barrel on the NYMEX, while its energy counterpart, natural gas, also booked a stronger price heading into the weekend.
Specifically, natural gas spot prices at the Henry Hub for January delivery climbed to $5.782 per thousand cubic feet, edging closer to what could potentially be the energy commodity's new threshold at $6 Mcf in the coming new year.
On the oil-side of the energy equation, a survey of analysts unveiled by Thompson Reuters on Friday anticipates U.S. crude rising to an average of $76.40 a barrel in 2010. Helping to prop up prices for the energy commodity today, Iranian soldiers crossed into Iraqi territory and took up a position at a southern oil field whose ownership is disputed by Iran, Reuters reported.
Oil Has Its Day Alongside Firmer Dollar
"The dollar was the primary reason the market moved around so much today," contended analyst Gene McGillian, reflecting on Friday's tumultuous trading session, which saw crude crest close to $75, while also testing the lower end of its current range near $72.
Entering the pre-holiday weekend, investors added weight to the U.S. currency as positive sentiments were stoked by signals of the economy's recovery. This strengthening in the greenback's value added pressure to the Dow and S&P stock indexes for the day; however, market participants ultimately sought to buy oil as a hard asset despite the firmer dollar, which typically makes its denominated commodities a riskier bet for investors.
"Normally, a rebounding dollar puts pressure on oil prices but today it didn't," the analyst with Tradition Energy continued. "You basically saw some follow-through from yesterday's rally with the crude market ending up slightly higher, although trading was choppy throughout most of the session."
Additionally, McGillian noted that increased volatility during today's trading was also due in part to the front-month Janaury contract nearing its expiration, which usually spurs short-covering investment for the energy commodity.
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