Commodity Corner: Oil Up 3.2%
Positive economic data and a lower-than-expected build in U.S. crude oil inventories resulted in a pre-holiday boost for January oil futures.
The front-month futures price settled at $83.86 a barrel Wednesday, a $2.61 gain from the previous day, after trading within a range from $80.97 to $83.75. Supporting oil were statistics released Wednesday indicating some glimmers of hope for the U.S. economy. According to the U.S. Department of Commerce, personal income increased 0.5 percent in October—above private-sector expectations. In addition, the agency stated that real consumer spending rose by 0.3 percent during the same period.
Also benefiting oil was an economic indicator in the Thomson Reuters/University of Michigan Surveys of Consumers, a monthly publication that was released Wednesday. The latest findings observe a 5.8% increase in consumer sentiment — from 67.7 in October to 71.6 in November. Nevertheless, the survey's authors caution that the significant increase does not necessarily mark a "turning point" in consumers' personal financial prospects. Indeed, they note that many consumers continue to report worsening personal finances.
"While consumers clearly believe that the recovery has gained some traction, most still think that the economic gains will be too small to improve their own job and income position anytime soon," stated Richard Curtin, Surveys of Consumers Chief Economist.
In its weekly report on the country's crude oil stocks, the U.S. Department of Energy's Energy Information Administration (EIA) reported that inventories rose to 358.6 million barrels as of November 19, 2010. Last week's 1 million-barrel gain reverses a sharp decline reported for the week of November 12, but the gain was lower than analysts had anticipated.
Natural gas for December delivery showed very little movement Wednesday, ending the day a penny higher at $4.27 per thousand cubic feet. Expectations of milder weather in the Northeast, along with very high storage volumes, prevented gas from increasing further.
Front-month natural gas peaked at $4.38 and bottomed out at $4.18.
December gasoline settled at $2.21 a gallon Wednesday, representing an eight cent gain from the previous session. Gasoline traded from $2.13 to $2.21.