Riding a fresh wave of good economic sentiments, NYMEX crude oil futures scaled higher after a two consecutive sessions on the downside as the dollar weakened and the U.S. Federal Reserve kept interest rates low.
Erasing recent losses, the price of light, sweet crude oil for April delivery gained by more than 2% on the session to settle back in positive territory at $81.70 a barrel. NYMEX gasoline futures also closed on the upside Tuesday at $2.28 a gallon.
On the opposite side of the energy coin, natural gas spot prices at the Henry Hub settled down to $4.35 Mcf. This year's uptick in demand for land rigs is driving expectations for an influx in natural gas supplies, which may push the energy commodity's prices even lower.
Oil's Arrow Aims High on Low Rates
"Crude is continuing to show its attachment to the broader financial markets," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut. The analyst noted that oil prices have been underpinned by financial movements "for the last half-year."
Specifically, McGillian pointed to a sell-off in the U.S. currency and rally in equities as the main impetuses for today's rebound in oil prices.
Today, markets rallied as the Fed chose to keep rates down near zero for an extended period while the recovering domestic economy continues to make strides. Additionally, the Japanese yen triumphed over the U.S. greenback, renewing risk appetite for dollar-denominated commodities.
"Whether or not there is sufficient strength in the oil market to really push on through [these highs] remains to be seen," McGillian warned. "Now we're going to take a look at this week's inventory reports to see if there's any sign that fuel demand is starting to get better."
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