Commodity Corner: Oil Up 1.6%
October crude oil futures rallied Monday, settling $1.20 higher to end the day at $74.86. The increase reverses course from last week, when oil prices declined by nearly 5%.
The front-month oil price surged along with equities markets, buoyed by a National Bureau of Economic Research (NBER) report concluding that the longest recession since World War II ended in June 2009 and that the economy has been in recovery since then. The leading nonprofit economic research organization in the U.S. cautioned, however, that the end of the 18-month recession means neither that economic conditions have become favorable nor that the economy is again operating at full capacity.
The NBER panelists did conclude that any future economic slump would be a new recession and not a continuation of the severe recession that began at the end of 2007.
Also supporting crude oil Monday was a weakening dollar against the euro. There are concerns that the Federal Reserve Board will decide on economic stimulus measures Tuesday that will diminish the value of the dollar. A stronger euro relative to the dollar typically places upward momentum on oil prices.
Oil traded within a range from $73.32 to $75.45 Monday.
Natural gas for October delivery fared considerably worse Monday, declining 4.9% to settle at $3.82 per thousand cubic feet. The 20-cent decline stems from a reduced threat to Gulf of Mexico oil and gas infrastructure from tropical systems. Milder weather—and hence lower demand for electricity from gas-fired power plants—also contributed to the bearish sentiment for gas.
The intraday range for natural gas Monday was $3.81 to $3.98.
The price of a gallon of gasoline settled three cents higher at $1.95. During Monday's trading, the gasoline price fluctuated between $1.92 and $1.97.